Executive Power,D&O Insurance And Financial Restatements

Executives,as the main decision-makers and executors of the company's decisions,bear the major responsibility in the progress of making decisions,issuing financial reports and Financial restatements.In recent years,the financial frauds,misstatements and misstatements of Listed Companies always happen in China.The related litigation of the enterprise stakeholders to listed companies and their executives has increased greatly,and the risk of management has also increased rapidly.The increasingly stringent capital market situation has brought unprecedented opportunities for directors'liability insurance(D&O insurance).As a hedge against accidental risk,D&O insurance can largely relieve the worries of directors and executives and encourage them to make positive decisions.In the domestic and foreign capital markets,D&O insurance has also begun to pay close attention to the theoretical and practical circles.But for financial restatements related to the vital interests of investors,there is little literature to consider the role of D&O insurance in China's capital market.This paper,based on the review of relevant literature and analysis of relevant theories,takes into account the governance effect of directors' liability insurance,and combines the theory of executive power with the two aspects of executive motivation and ability to consider the impact mechanism of the financial restatement from two aspects of executive motivation and ability,taking 2012-2016 years as a sample of listed companies to share the listed companies.Logit regression analysis is not carried out.First,the effect of directors'liability insurance on financial restatement is investigated,and then the regulation effect of executive power on this relationship is further analyzed.Studies have shown that companies that have already bought D&O insurance have a higher probability of subsequent financial restatements,and the increase in executive power has pushed up the probability of a D&O insurance restatement.The results show that the introduction of D&O insurance in China's listed companies has a strong opportunist motivation,and the increase of executive power has played an important role in the implementation of the opportunistic behavior of the listed companies.The conclusion of this paper extends the research of directors' liability insurance in corporate governance,and further improves the research field of the risk factors of financial restatement.In addition,the enlightenment to the theoretical and practical circles should be to further optimize the design of the insurance clauses of directors' executive responsibility,to give full play to its positive role,to strengthen the company's own incentive and supervision system as the direction of long-term efforts,and to further improve the effectiveness of the executive responsibility insurance of the directors to play a positive role in the governance of the company.The internal governance structure reasonably limits executive power,thereby improving the quality of reporting and protecting the interests of investors.