Directors’ and Officers’ Liability Insurance, Corporate Risk and Risk Taking: New Panel Data Evidence on the Role of Directors’ and Officers’ Liability
نویسندگان
چکیده
In this paper, we develop and estimate models of the determinants of firms’ demand for directors’ and officers’ liability insurance. We add to and validate the existing empirical literature by testing hypotheses regarding the relationship between D&O insurance purchase and firm size, governance characteristics and business risk. Our data set allows us to test both purchase decisions and limits choices. We present separate estimates of these decisions along with estimates that allow for their joint determination and recognize the potential for selection bias in the estimates of coverage limits models. To shed additional light on the role and consequences of D&O insurance we make additional use of the panel structure of our data to examine the effects of D&O insurance purchase on corporate governance. * Comments and suggestions are welcomed. Please do not distribute, cite or quote without the authors’ permission. Copyright © 2008 and 2011 by M. Martin Boyer and Sharon Tennyson.
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