DIRECTORS' AND OFFICERS' LIABILITY INSURANCE AND FIRM VALUE
- Authors
- Hwang, Joon Ho; Kim, Byungmo
- Issue Date
- 6월-2018
- Publisher
- WILEY
- Citation
- JOURNAL OF RISK AND INSURANCE, v.85, no.2, pp.447 - 482
- Indexed
- SSCI
SCOPUS
- Journal Title
- JOURNAL OF RISK AND INSURANCE
- Volume
- 85
- Number
- 2
- Start Page
- 447
- End Page
- 482
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/75085
- DOI
- 10.1111/jori.12136
- ISSN
- 0022-4367
- Abstract
- This study examines the effect of directors' and officers' liability (D&O) insurance on firm value. Previous studies are divided on the value implication of D&O insurance: some argue for various benefits of being covered by D&O insurance, whereas others focus on the managerial opportunism stemming from being insured. In order to address whether D&O insurance increases firm value, we utilize a sample of quoted Korean companies from a period in which the disclosure of D&O insurance information was mandatory and there was a significant cross-sectional variation in the firms' coverage of D&O insurance. We find that controlling for the endogeneity of D&O insurance coverage, D&O insurance increases firm value compared to noninsured firms. We also find evidence that the increase in firm value is pronounced for firms with greater growth opportunities, which suggests that D&O insurance can help firms to better convert growth opportunities into higher firm value.
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Collections - Korea University Business School > Department of Business Administration > 1. Journal Articles
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