RESEARCH ARTICLE
Directors' and officers' liability insurance and minority shareholders' participation in corporate governance
Ruigang Zhang,
Runze Yang,
Hanwen Huo,
Ruigang Zhang
School of Economics, Guangxi University, Nanning, China
Search for more papers by this authorRunze Yang
School of Finance, Shanghai University of Finance and Economics, Shanghai, China
Search for more papers by this authorCorresponding Author
Hanwen Huo
School of Economics, Guangxi University, Nanning, China
Correspondence
Hanwen Huo, School of Economics, Guangxi University, Nanning 530004, China.
Email: [email protected]
Search for more papers by this authorRuigang Zhang,
Runze Yang,
Hanwen Huo,
Ruigang Zhang
School of Economics, Guangxi University, Nanning, China
Search for more papers by this authorRunze Yang
School of Finance, Shanghai University of Finance and Economics, Shanghai, China
Search for more papers by this authorCorresponding Author
Hanwen Huo
School of Economics, Guangxi University, Nanning, China
Correspondence
Hanwen Huo, School of Economics, Guangxi University, Nanning 530004, China.
Email: [email protected]
Search for more papers by this authorFirst published: 07 March 2024
Abstract
This study empirically investigates the influence of directors' and officers' liability insurance (D&O insurance) on minority shareholders' participation in corporate governance. Using a sample from Chinese A-share listed companies between 2011 and 2018, we find that D&O insurance can significantly decrease the participation of minority shareholders, and this conclusion remains valid after robustness checks. The mechanism analysis demonstrates that D&O insurance plays a positive role in diminishing minority shareholders' participation through the enhancement of firm performance. Further analyses suggest that the negative association between D&O insurance and minority shareholders' participation is more pronounced in firms with weaker corporate governance practices. These findings provide evidence for the supervisory governance role of D&O insurance, suggesting China should consider encouraging listed companies to purchase D&O insurance for the protection of minority shareholders.
CONFLICT OF INTEREST STATEMENT
The authors declare no conflict of interest.
Open Research
DATA AVAILABILITY STATEMENT
The data that support the findings of this study are available from the corresponding author upon reasonable request.
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