A Research On Listed Company Executives Liability Insurance

Directors and Officers Liability insurance is very popular in foreign countries, but the development in China is not veiy good.In the United States, a survey showed that 97% of the directors of listed companies are purchasing liability insurance, insurance rates for some sectors even up to 100%.The insurance rate of Canadian listed company is 86 percent, The insurance rate of China’s Hong Kong is 76%. In China, the coverage rate of domestic director’s liability insurance is only 5%. Whether the introduction of a listed company directors liability insurance is not only a topic in the field of finance and insurance, but a hot topic in the field of corporate governance.But the introduction of liability insurance to the directors of listed companies is more good than harm or harm than good, the researchers argue. We have reasons to study the needs and impact about the director liability insurance. On the basis of combing the relevant literature on domestic and overseas, and according to China’s specific situation, the paper proposes four possible factors,which influence the development of director liability insurance in China’s listed companies,namely,the degree of centralization of equity, the debt ratio, the degree of internationalization of equity as well as the proportion of independent directors in executives. We have implemented the relevant empirical test.The test results show that there is a positive correlation between the degree of internationalization of equity.. the proportion of independent directors in executives and the the needs and impact about the director liability insurance.On the basis of researching the factors on the requirements of the listed companies directors’s liability insurance in China, we further investigate the effect of director liability insurance on the performance of listed companies. As the 2008-2012 China A-share listed companies for the samples, this paper selects the" size, chairman and general manager of the company whether part-time, the total return on assets as well as executive pay and other companies controlled performance indicators to an empirical test.It shows that the introduction of director liability insurance will help improve corporate performance,and the conclusions of this study will help China’s listed companies and the investors to deepen the awareness and understanding of the executive directors liability insurances,and provide some experiences for the regulatory authorities to regulate the use of executive directors liability insurance.