The Effect Research Of Directors' And Officers' Liability Insurance On Corporate Finance Investment

In recent years,the financial scandals of listed companies frequently are exposed to the public.Lawsuits against directors and executives also accordingly have increased.The companies' directors and executives are also facing occupational risks from censor and compensation and so on.As a result,demands of directors' and officers' liability insurance is increasingly obvious.Foreign scholars have carried out detailed discussion about the motivations for the purchasing demands of directors'and officers' liability insurance,and formed relevant theoretical systems,such as external supervision hypothesis,signal transmission hypothesis,opportunism hypothesis and so on.However,researches on directors' and officers' liability insurance are mainly focused on the level of demand.The behavioral effects and economic consequences with directors' and officers' liability insurance have not been enough mentioned.In addition,in Europe,the United States and other developed countries,most of companies purchased their directors' and officers' liability insurance,while the domestic purchase rate is not as high as them.Why is the situation at home and abroad different.In order to seek answers it requires research on the situation of domestic directors' and officers'liability insurance.The initial motivation for the purchase of directors' and officers'liability insurance may be intended to defuse or transfer the occupational risks directors and executives face,but it is generally believed that directors' and officers' liability insurance has two functions.The first one is the function of external supervision.The management of liability insurance will increase the external supervision of third-party insurance companies which will constrain management speculation,corporate governance have a favorable impact;the second is the role of risk asylum,corporate directors purchased liability insurance,the risk will be passed on to Insurance companies,in order to act as an umbrella of management,exacerbate its opportunism,induce speculation.In order to find out the actual effect of directors' and officers' liability insurance after purchasing it,this paper chooses the situation of financial investment as the breakthrough point,because the financial investment is more risky than the productive investment,the speculative purpose will be bigger.The impact of financial assets after the purchase of directors' and officers'liability insurance may be more obvious.It is also easier to find out the actual effect of the directors' and officers' liability insurance on the enterprises when they choose financial assets.Therefore,based on the financial data of A-share listed companies from 2010 to 2015 and the data of directors' and officers' liability insurance collected by handwork,the paper deeply discusses the correlation between directors' and officers' liability insurance and corporate financial investment.And on this basis,the paper further refine the property rights of enterprises and increase the elements of investor protection,and draw the following conclusions:(1)There is a significant positive correlation between the directors' and officers' liability insurance for senior executives and the size of corporate financial investment;(2)Compared with non-state-owned enterprises,there is a positive correlation between directors' and officers' liability insurance and state-owned enterprises' financial investment.(3)Investor protection weakens the positive correlation between the directors' and officers'liability insurance and corporate financial investment;(4)With the investor protection,the relationship in state-owned enterprises between directors' and officers' liability insurance and financial investment is inhibited significantly.Finally,based on the conclusion,this paper hopes to provide reference for the directors' and officers' liability insurance purchase of listed companies in China from the microscopic angle.At the same time,we hope to provide the relevant evidence for relevant policy makers,legislators and regulators from the macroscopic angle.At the end of this paper,the shortcomings of this paper and future research directions are also described.