Directors And Executives Liability Insurance,Risk-taking And Corporate R&D Investment

The independent research and development of enterprises has an important impact on their own sustainable development and national economic growth.R&D activities are characterized by high uncertainty,long time and high cost.Under the mechanism of separation of ownership and management,corporate managers are likely to reduce R&D investment for risk aversion and their own career development considerations.Therefore,the key to increasing the R&D investment of enterprises is to change the management’s attitude towards risk and to improve the risk-taking of the management and corporate.The fundamental purpose of directors’ liability insurance is to ease the management’s risk aversion awareness and improve its risk-taking.However,as an emerging governance model,directors’ liability insurance has not yet been widely used in China.Therefore,it is of great significance to explore the impact of director liability insurance on corporate R&D investment and the role of corporate risk-taking in the relationship between the two.The 2009-2019 A-share listed companies in Shanghai and Shenzhen are selected as research samples.Considering risk taking,the analysis and research is conducted by combining empirical research and normative research.The research ideas are as follows.Firstly,this paper introduces the research background and significance,and leads to the research topic.Secondly,the literatures on directors and liability insurance,risk taking of enterprise,and enterprise R&D investment are summarized.Based on the theoretical content,this paper sorts out the relationship among the three and proposes the research hypothesis.Again,enter the empirical part,including screening data,selecting variable measurement methods,constructing two-way fixed effect model and mediating effect model.To analyze and verify the above hypothesis,the benchmark regression,mediation effect test,heterogeneity test and other empirical methods are used.In addition,the results are tested for robustness.The PSM and instrumental variable methods are applied to eliminate the influence of reverse causality and the sample self-selection bias.Finally,conclusions and suggestions are drawn.Three conclusions are drawn in this paper.(1)Directors and liability insurance is beneficial to enterprise R&D investment.(2)The enterprise risk taking has the mediating effect in the positive relationship between director liability insurance and enterprise R&D investment.(3)The impact of director liability insurance on R&D investment of enterprises with different characteristics is different.From the perspective of the company’s internal characteristics,the directors and liability insurance has a larger influence in enterprises with higher management risk preference,lower ownership,and non-state-owned property rights.From the perspective of the company’s external environmental characteristics,the role of directors and liability insurance in promoting corporate R&D investment is more effective for companies with weak investor protection and low litigation risk.Combining the research conclusions and practical factors,some suggestions are proposed.(1)Establish and improve relevant laws,regulations and rules of director and liability insurance,and actively introduce director and liability insurance.(2)Improving enterprise risk-taking level.(3)Insurance companies improve the services of director and liability insurance,listed companies improve their own governance mechanism.The possible innovations of this paper are: using empirical research methods to explore the mediating role of corporate risk taking between D&O insurance and corporate R&D investment;enriching and refining relevant fields of D&O heterogeneity research;The director liability insurance database in the CNRDS platform is collected and aggregated by a professional team in the platform,and the data is highly reliable.