D&O Insurance,Internal Control And Over-investment

Directors' and Officers' Insurance(hereinafter referred to as "D&O Insurance")first appeared in some economically developed countries in Europe and America.D&O insurance in China is in its infancy,and in recent years,it has gradually attracted the attention of listed companies.In 2017,the insurance coverage rate of China's D&O insurance reached 13.2%,far lower than the insurance coverage rate of over 90%in Europe and the United States.At present,domestic and foreign scholars have not reached a consensus on the governance effect of D&O insurance on the company.Some scholars start from the signal transmission function and external supervision of D&O insurance,and support D&O insurance to have a positive effect on corporate governance.From the perspective of opportunism,other scholars believe that the role of D&O insurance has a negative impact on corporate governance.This paper will explore the corporate governance effect of D&O insurance in China's current capital market environment based on the perspective of over-investment in enterprises.Based on the 2008-2017 Shanghai-Shenzhen A-share listed company as a research sample,this paper comprehensively applies normative analysis,empirical analysis and endogenous testing on the basis of distinguishing the nature of corporate property rights by collating and collecting relevant data such as D&O insurance and corporate over-investment.In this paper,the influence of D&O insurance and property rights on over-investment of enterprises is investigated.The conclusion is drawn that there is a significant negative correlation between D&O insurance and the level of over-investment of enterprises.Considering the influence of property rights,the above relationship is not It is more obvious in state-owned enterprises;further tests have found that D&O insurance has a more obvious effect on over-investment in enterprises with relatively higher internal control quality,but the above relationship is only reflected in non-state-owned enterprises,which indicates D&O insurance as a An external supervision mechanism can form a good complementarity with the internal control of the enterprise,but this positive effect is bound to a certain extent by the property rights of the enterprise.The conclusions of this paper have enriched the relevant research on internal control and deepened the understanding and understanding of the governance effects of D&O insurance companies.The empirical results verify the governance effect of D&O insurance external supervision to a certain extent,which provides a theoretical reference for the application and development of D&O insurance in China.D&O insurance has a positive impact on corporate governance and provides a new perspective for corporate governance,which can be used as a substitute and complement to corporate governance mechanisms in the short term.In the long run,we can improve the corporate governance system by strengthening internal control construction and optimizing the manager incentive system.At the same time,further improve the understanding of D&O insurance,optimize the external environment of D&O insurance,and make D&O insurance better participate in the company's governance.