IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v94y2024ics1059056024004118.html
   My bibliography  Save this article

How does directors' and officers' liability insurance affect green innovation? Evidence from China

Author

Listed:
  • Han, Yuling
  • Boubaker, Sabri
  • Li, Wanfu
  • Wang, Yu

Abstract

This paper examines the relationship between directors' and officers' liability insurance (D&O insurance) and firms' green innovation. Using a large dataset on firms' green innovation achievements of Chinese listed firms over 2002–2019, we show that firms with D&O insurance significantly boost their green innovation performance, particularly those facing higher litigation risks, without political connections, and exhibiting corporate governance. Additionally, we find that the green innovation of insured firms significantly bolsters firm value, indicating that D&O insurance helps achieve a win-win situation between shareholder value and environmental sustainability. The mechanism analysis shows that the supervision effect of D&O insurers in mitigating managerial self-interest behavior is the underlying channel through which D&O Insurance affects firms’ green innovation. Overall, our findings suggest that D&O insurance encourages firms' directors and officers to actively pursue green innovation, thereby positively impacting firm value.

Suggested Citation

  • Han, Yuling & Boubaker, Sabri & Li, Wanfu & Wang, Yu, 2024. "How does directors' and officers' liability insurance affect green innovation? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:reveco:v:94:y:2024:i:c:s1059056024004118
    DOI: 10.1016/j.iref.2024.103419
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056024004118
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2024.103419?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Green innovation; Environmental performance; D&O insurance; Risk-taking;
    All these keywords.

    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:94:y:2024:i:c:s1059056024004118. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.