Online attention and directors’ and officers’ liability insurance: evidence from Chinese listed firms

This study investigates the effects of online attention on corporate purchases of directors’ and officers’ (D&O) liability insurance. Using data from 2011 to 2021 on A-share Chinese listed firms, our theoretical analysis and empirical tests show that online attention increases purchases. The analysis and tests of the mediating mechanisms show that online attention increases insurance purchases by improving investor protection and exacerbating managerial career concerns. For the moderating mechanisms, our analysis and tests show that investors’ visits to websites weaken the effect of online attention on liability insurance purchases, while corporate tax aggressiveness strengthens it. Our analysis and heterogeneity tests indicate that the increase in insurance purchases following online attention is more statistically significant in firms that have lower investor confidence, do not voluntarily disclose social responsibility information, are state-owned and face tighter financing constraints. The findings are of great significance for the improvement of the risk management system in China’s capital markets.