The Impact Of Director Liability Insurance On Enterprise Value

The report to the Party’s 20 th National Congress points out that high-quality development is the primary task of building a modern socialist country in an all-round way.In this context,the high quality development of enterprises means the improvement of enterprise value,naturally inseparable from the enterprise’s research and development and innovation.However,many senior executives are cautious and conservative when dealing with R&D investment decisions because they are worried about job risks.Therefore,as a governance tool and risk mechanism,directors’ and executives’ liability insurance is gradually paid attention to by investors and enterprise managers.It can be used to hedge the career risks of senior executives,thereby improving the risk tolerance level of enterprises and increasing the investment willingness of managers,thus affecting the R&D decisions of enterprises.At present,scholars at home and abroad have not reached a unified conclusion on the impact of directors’ and executives’ liability insurance on enterprise value.Based on the theory and hypothesis of principal-agent,high-level hierarchy,external supervision and opportunism,this thesis takes the A-share listed companies in Shanghai and Shenzhen from 2012 to 2021 as the research object,establishes panel sample data,adopts the fixed effect model of control industry and year,explores the relationship between directors’ and executives’ liability insurance and enterprise value,and further explores the mediating effect of enterprise R&D investment.The main conclusions of this study are as follows: first,the purchase of directors’ and executives’ liability insurance will improve enterprise value.The empirical results of this thesis support the external supervision hypothesis and the management incentive hypothesis;Second,through further testing,research and development investment has a partial mediating effect between directors’ and executives’ liability insurance and enterprise value.Third,the tests for model robustness and endogeneity in this study confirmed the main research conclusions.In the end,this thesis puts forward suggestions on the future development of directors’ executive liability insurance,such as improving corporate governance structure and standardizing relevant laws and regulations,and the shortcomings of this thesis.