Research on Accounting Detailed by Researchers at Shanghai University of Finance and Economics (Do bond market participants care about directors’ and officers’ liability insurance?–Empirical evidence based on the pricing of corporate bonds): Business – Accounting

2022 NOV 30 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- New study results on accounting have been published. According to news reporting out of Shanghai, People’s Republic of China, by NewsRx editors, research stated, “Based on the risk hedging perspective, this paper examines the impact of directors’ and officers’ liability insurance (hereafter referred to as D&O liability insurance) on the pricing of corporate bonds.”

Financial supporters for this research include The National Natural Science Foundation of China.

Our news reporters obtained a quote from the research from Shanghai University of Finance and Economics: “We find that the purchase of D&O liability insurance can effectively reduce corporate bond insurance pricing. The path test shows that the purchase of D&O liability insurance can reduce the bond insurance pricing by improving the quality of company’s internal control. Furthermore, the paper finds that when management power is greater, investor protection is poor or financial risk is high,the impact of the D&O liability insurance is stronger. After purchasing D&O liability insurance, creditors will reduce the use of corporate governance contractual terms, but will set more investments and financing as well as option contractual terms.”

According to the news editors, the research concluded: “In addition, companies that purchase D&O liability insurance issue bonds with higher credit ratings and longer bond maturities.”

For more information on this research see: Do bond market participants care about directors’ and officers’ liability insurance?--Empirical evidence based on the pricing of corporate bonds. China Journal of Accounting Studies, 2022,10(3):367-389. The publisher for China Journal of Accounting Studies is Taylor & Francis Group.

A free version of this journal article is available at https://doi.org/10.1080/21697213.2022.2143679.

Our news journalists report that more information may be obtained by contacting Yu Wang, School of Accountancy, Shanghai University of Finance and Economics, Shanghai, People’s Republic of China. Additional authors for this research include Jiawei Lu, Xun Zhao.

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