Research On The Influence Of Directors' And Officers' Liability Insurance And Capital Structure Adjustment

Recently with the continuous deepening of the Supply-side Reform,De-leveraging is coming into people's vision.Modes of business operation that blindly advocate high leverage and high income are being questioned.Wanda Group,a very famous real estate enterprise,has recently sold hundreds of billions of heavy assets to adjust its capital structure.And Leshi Group,another famous enterprise,is facing great finance crisis because of its high level of asset liability and the break of the capital chain.It is necessary to have strategic forward-looking and flexible response to maintain an effective dynamic adjustment of the capital structure for the enterprises to fit the rapid and steady development of the modern society.Reasonable capital structure is the key to keep sustained and healthy development.Directors' and Officers' liability insurance was been introduced to our country since early twenty-first Century because of its outstanding corporate governance effect.However,after over 10 years development the rate of buying Directors' and Officers' liability insurance in china still has a long distance with overseas.The scholars and theorists in our country begin to do research on Directors'and Officers'liability insurance on the basis of foreign research and have formed a systematic theoretical system about the demand motivation and governance effect of Directors' and Officers' liability insurance.There are a number of researches use variables like investment efficiency or overinvestment to find how Directors' and Officers' liability insurance influence companies' capital problems.But there are great disputes both abroad and at home about the governing role of Directors' and Officers' liability insurance on the problem of enterprise capital.This paper uses the dynamically adjustment of capital structure as index to research the governing role of Directors'and Officers' liability insurance on the problem of enterprise capital in an effective way.The research can not only provide a theoretical basis for the promotion of Directors' and Officers' liability insurance in China but also provide a new solution for Chinese enterprises to improve their capital structure.Taking A-share listed companies in China for 2010-2016 years as there search sample,this paper examines the influence of the introduction of executive liability insurance on the dynamic adjustment of capital structure and its influence path.The study found that the Directors' and Officers' liability insurance can speed up the adjustment of the capital structure to the target capital structure.After distinguishing the different adjustment direction,we found that although the downward adjustment of capital structure is always faster than the upward adjustment,the Directors' and Officers' liability insurance can reduce the gap.Considering the influence of other conditions,the further study has found that Directors' and Officers'liability insurance can alleviate the negative effect of state-owned property right on the speed of capital structure adjustment;and in the enterprises with over confident executives,the introduction of Directors' and Officers'liability insurance will slow down the pace of capital structure adjustment.The research of this paper not only enriches the study of the reach of Directors'and Officers'liability insurance,but also provides a new way for listed companies to solve the problem of capital structure adjustment.