Litigation Risk, Judicial Transparency and Directors’ and Officers’ Liability Insurance - Journal of Financial Risk Management

JFRM > Vol.5 No.4, December 2016

Journal of Financial Risk Management

Volume 5, Issue 4 (December 2016)

ISSN Print: 2167-9533 ISSN Online: 2167-9541

Google-based Impact Factor: 1.09 Citations

Litigation Risk, Judicial Transparency and Directors’ and Officers’ Liability Insurance ()

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DOI: 10.4236/jfrm.2016.54021 1,725 Downloads 4,339 Views Citations

Author(s)

Yang Zhao¹, Jun Hu^2*, Xing Shu¹

Affiliation(s)

¹Department of Corporate Management, School of Economics and Management, Hainan University, Haikou, China.
²Department of Accounting, School of Management, Jinan University, Guangzhou, China.

ABSTRACT

Using a sample of listed companies in China from 2009 to 2014, this paper investigates relation between litigation risk and the directors’ and officers’ liability insurance (D&O insurance). The research results show that the higher the risk of litigation, the stronger motivation of the company to buy the D&O insurance, and the judicial transparency has positive moderating effect on the above relationship. It is found that the demand of D&O is influenced by the previous company’s litigation risk and the continuous purchase of the D&O insurance could be promoted by the company's litigation. Our study enriched the D&O insurance demand motive theory, the research conclusion for the D&O insurance in the development of our country and popularity to provide policy and suggestions for reference.

KEYWORDS

Litigation Risk, Judicial Transparency, Directors’ and Officers’ Liability Insurance

Share and Cite:

Zhao, Y. , Hu, J. and Shu, X. (2016) Litigation Risk, Judicial Transparency and Directors’ and Officers’ Liability Insurance. Journal of Financial Risk Management, 5, 213-228. doi: 10.4236/jfrm.2016.54021.

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