D&O Insurance,Information Transparency And Financing Constraints

In recent years,particularly since the global financial crisis in 2008,by the impact of the intricacies international environmental,China's economic growth became slowing,which increase much downward pressure and business risk to Chinese capital market.Risk selection of corporate investment and financing strategy is one of the factors which important for company's survival and development in this complicated internal and external governance environment.Corporate manager as a backbone forces,also plays an irreplaceable role in the business process.So,in this complex competitive environment,how to guide managers to perform their duties effectively and take risks actively is a most prominent issue to contemporary corporate governance,also the hot spots and focus to the company's financial theorists in recent years.D&O insurance originated in Europe and other mature capital market,its connotation of utility incentives and external oversight has caused much concern in Western countries.Though D&O insurance's corporate governance theory has been improving,but whether it is suitable for the China capital markets,which economy background is still in transition period,is worth for us studying and discussion.This paper based on the listed companies' financial data from 2007-2014,by sorting and collecting the relevant data of D&O insurance,information transparency and financing constraints,according to the differences dimensions of the manager power,integrated use of normative analysis,empirical analysis and endogenous inspection methods,analysis the relationship among D&O insurance,information transparency and financing constraints.The results show that information transparency reduce financing constraints;the introduction of D&O insurance can stimulate a reducing on financing constraints,and this stimulation could change the negative relationship that asymmetric information impact on financing constraints.Conclusions of this study deepened the awareness and understanding of D&O insurance's corporate governance theory,effectively expanding the research areas of managers' power in corporate governance,and further improved the corporate risk-taking influences factors for research system.In addition,D&O insurance involved in corporate governance reflects the positive effect,which providing a possible new vision for governance theorists and practitioners reduce agency conflicts.A proper understanding of the D&O insurance involved in corporate governance should be that strengthening the company's own motivation and supervision system of governance is the long-term direction for efforts,in the short term may seek D&O insurance as a alternative or complementary for corporate governance mechanisms,managers and investor protection,while further improving the external environment for D&O insurance to play a positive role,so as to achieve the purpose of optimizing corporate governance.