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The effect of directors' and officers' liabilities insurance on corporate social responsibility evidence from China

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  • Meng, Qingbin
  • Wang, Song
  • Zhong, Ziya

Abstract

Using the sample of Chinese publicly listed companies from 2008 to 2018, we find that the firms whose managers are covered by Directors' and Officers' Liabilities Insurance (D&O insurance) are more likely to have better performance in their corporate social responsibility (CSR) activities. The effect of D&O insurance on CSR is more pronounced when the surrounding insurance industry is more active, when the corporate governance is weaker, and when the external monitoring is less sufficient. Moreover, when D&O insurance is at presence, CSR activities can affect the firm's operating performance more effectively and positively. Overall, our results suggest that D&O insurance can be positively aligned with the shareholders' interests in promoting CSR.

Suggested Citation

  • Meng, Qingbin & Wang, Song & Zhong, Ziya, 2024. "The effect of directors' and officers' liabilities insurance on corporate social responsibility evidence from China," International Review of Financial Analysis, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:finana:v:93:y:2024:i:c:s105752192400108x
    DOI: 10.1016/j.irfa.2024.103176
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