Directors’ And Officers’ Liability Insurance And Corporate Investment Efficiency

In the context of the increasing uncertainty of the external economic environment and China’s increasing attention to the protection of the rights and interests of stakeholders of listed companies,the improvement of the investment efficiency of enterprises is related to the healthy development of listed companies.In this context,it is of great significance for enterprises and regulatory authorities to study directors and officers’ liability insurance,correctly understand its impact on the efficiency of enterprise investment,and promote its positive effect on the development of listed companies.This thesis selects the A-share non-financial listed companies in Shanghai and Shenzhen Stock Exchanges from 2015 to 2020 as the research sample,and mainly studies the impact of the purchase of directors’ liability insurance on the investment efficiency of enterprises.Based on the principal-agent theory,signal transmission theory and moral hazard hypothesis and other basic theories,the thesis incorporates directors’ liability insurance,investment efficiency and internal control variables into the research framework,puts forward the research assumptions of this thesis and conducts empirical tests one by one,and finds that:(1)The purchase of directors’ liability insurance can significantly improve the investment efficiency of enterprises.Due to the high risk of investment and the uncertainty of return,enterprise managers have hedging behaviors based on their own risk considerations,and their investment willingness is not high.The risk sharing and transfer function of directors’ liability insurance can improve the tolerance of enterprise managers to risk,help to seize investment opportunities,boldly invest and improve investment efficiency.(2)Directors’ liability insurance can improve the investment efficiency of enterprises by alleviating the investment shortage.The protection and supervision of the management brought by the introduction of external supervision,such as insurance companies,can reduce the sensitivity of the management to risk,and avoid the loss of investment opportunities due to excessive caution in decision-making.At the same time,effective external supervision can also improve the internal governance system and further improve investment efficiency.(3)Directors’ liability insurance can improve the investment efficiency of enterprises by restraining excessive investment.The intervention of insurance institutions has improved the information transparency of enterprises,reduced the gency costs,and strengthened the positive management role of external supervision on enterprises,so that enterprises’ inefficient investment behavior can be found and restrained in a timely manner.The improvement of enterprise investment efficiency is the result of the interaction and interaction of multiple reasons,and the improvement of enterprise investment efficiency cannot be achieved overnight.As one of the important corporate governance mechanisms,directors’ liability insurance needs cooperation and efforts from all sides to play its positive role.Only by combining internal governance measures and external supervision measures can directors’ liability insurance better adapt to China’s national conditions and give full play to its positive role.