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Article: Controlling-minority shareholder incentive conflicts and directors' and officers' liability insurance: Evidence from China
Title | Controlling-minority shareholder incentive conflicts and directors' and officers' liability insurance: Evidence from China |
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Authors | |
Keywords | China D&O Insurance Expropriation Private Securities Litigation Tunneling |
Issue Date | 2008 |
Publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jbf |
Citation | Journal Of Banking And Finance, 2008, v. 32 n. 12, p. 2636-2645 How to Cite? |
Abstract | This paper examines the demand for directors' and officers' liability insurance (D&O insurance) by Chinese listed companies where controlling-minority shareholder incentive conflicts are acute due to the concentrated and split ownership structure. We hypothesize and find evidence that the incidence of seeking D&O insurance is positively related to the extent of controlling-minority shareholder incentive conflicts - a finding not previously documented in the literature. Using an event study, we find that the announcements of D&O insurance decisions in firms that engage in earnings management, and/or are controlled by a local government (such firms tend to have stronger incentives to tunnel), seem to have a negative wealth effect. In addition, the incidence of the D&O insurance decision is positively related to the proportion of independent directors and several litigation risk proxies. Therefore, the breakthrough in corporate governance and judicial reforms has created non-negligible perceived securities litigation risks in China. © 2008 Elsevier B.V. All rights reserved. |
Persistent Identifier | http://hdl.handle.net/10722/188458 |
ISSN | 2023 Impact Factor: 3.6 2023 SCImago Journal Rankings: 1.663 |
SSRN | |
ISI Accession Number ID | |
References |
DC Field | Value | Language |
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dc.contributor.author | Zou, H | en_US |
dc.contributor.author | Wong, S | en_US |
dc.contributor.author | Shum, C | en_US |
dc.contributor.author | Xiong, J | en_US |
dc.contributor.author | Yan, J | en_US |
dc.date.accessioned | 2013-09-03T04:07:43Z | - |
dc.date.available | 2013-09-03T04:07:43Z | - |
dc.date.issued | 2008 | en_US |
dc.identifier.citation | Journal Of Banking And Finance, 2008, v. 32 n. 12, p. 2636-2645 | en_US |
dc.identifier.issn | 0378-4266 | en_US |
dc.identifier.uri | http://hdl.handle.net/10722/188458 | - |
dc.description.abstract | This paper examines the demand for directors' and officers' liability insurance (D&O insurance) by Chinese listed companies where controlling-minority shareholder incentive conflicts are acute due to the concentrated and split ownership structure. We hypothesize and find evidence that the incidence of seeking D&O insurance is positively related to the extent of controlling-minority shareholder incentive conflicts - a finding not previously documented in the literature. Using an event study, we find that the announcements of D&O insurance decisions in firms that engage in earnings management, and/or are controlled by a local government (such firms tend to have stronger incentives to tunnel), seem to have a negative wealth effect. In addition, the incidence of the D&O insurance decision is positively related to the proportion of independent directors and several litigation risk proxies. Therefore, the breakthrough in corporate governance and judicial reforms has created non-negligible perceived securities litigation risks in China. © 2008 Elsevier B.V. All rights reserved. | en_US |
dc.language | eng | en_US |
dc.publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jbf | en_US |
dc.relation.ispartof | Journal of Banking and Finance | en_US |
dc.rights | This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. | - |
dc.rights | NOTICE: this is the author’s version of a work that was accepted for publication in <Journal of Banking and Finance>. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in PUBLICATION, [VOL 32, ISSUE 12, (2008)] DOI 10.1016/j.jbankfin.2008.05.015 | - |
dc.subject | China | en_US |
dc.subject | D&O Insurance | en_US |
dc.subject | Expropriation | en_US |
dc.subject | Private Securities Litigation | en_US |
dc.subject | Tunneling | en_US |
dc.title | Controlling-minority shareholder incentive conflicts and directors' and officers' liability insurance: Evidence from China | en_US |
dc.type | Article | en_US |
dc.identifier.email | Zou, H: hongzou@hku.hk | en_US |
dc.identifier.authority | Zou, H=rp01800 | en_US |
dc.description.nature | postprint | en_US |
dc.identifier.doi | 10.1016/j.jbankfin.2008.05.015 | en_US |
dc.identifier.scopus | eid_2-s2.0-55149094310 | en_US |
dc.relation.references | http://www.scopus.com/mlt/select.url?eid=2-s2.0-55149094310&selection=ref&src=s&origin=recordpage | en_US |
dc.identifier.volume | 32 | en_US |
dc.identifier.issue | 12 | en_US |
dc.identifier.spage | 2636 | en_US |
dc.identifier.epage | 2645 | en_US |
dc.identifier.isi | WOS:000261352300015 | - |
dc.publisher.place | Netherlands | en_US |
dc.identifier.ssrn | 1652174 | - |
dc.identifier.scopusauthorid | Zou, H=12769328900 | en_US |
dc.identifier.scopusauthorid | Wong, S=7404590456 | en_US |
dc.identifier.scopusauthorid | Shum, C=24462608500 | en_US |
dc.identifier.scopusauthorid | Xiong, J=24462885800 | en_US |
dc.identifier.scopusauthorid | Yan, J=55467720200 | en_US |
dc.identifier.issnl | 0378-4266 | - |