Investment under Uncertainty: The Effect of Directors' and Officers' Liability Insurance

投資與不確定性間的關聯：投保董監事及重要職員責任保險之影響

陳昭君(Chao-Chun Chen) ； 張哲嘉(Che-Chia Chang)

《會計審計論叢》 12卷2期 (2022/12) Pp. 139-183

摘要

The real options framework indicates a negative relation between corporate investment and uncertainty. However, managerial risk aversion leads corporate investment to become sensitive to diversifiable firm-specific risk, which may not be optimal from the perspective of shareholders. This research thus examines the investment-uncertainty relation based on the effect of directors' and officers' liability (D&O) insurance. Analysis of listed firms in Taiwan shows that D&O insurance alleviates investment sensitivity to firm-specific volatility for firms with high managerial ownership. This is consistent with the notion that D&O insurance encourages insured executives to bear appropriate risks and mitigates underinvestment from the perspective of well-diversified shareholders. This study further documents that the effect of D&O insurance is pronounced mainly for firms with low financial constraints and high litigation risk. Finally, this study finds that D&O insurance improves the value of real options.

關鍵字

Directors' and officers' liability insurance ； Investment efficiency ； Uncertainty ； Volatility ； Real options

並列摘要

實質選擇權理論指出投資與不確定性間存在負關聯性，但經理人風險趨避亦造成投資過度反應可分散的公司特有風險。本文援此探討台灣公司投保董監事及重要職員責任保險（D&O責任險）後其投資對波動性的敏感程度。實證結果指出對高經理人持股公司而言，投保D&O責任險會減緩公司投資對其特有波動性的敏感程度，隱含投保D&O責任險有助鼓勵公司承擔非系統風險、減緩投資不足並與股東價值連結。實證結果亦指出上述投保D&O責任險效果主要作用在低融資限制公司與高訴訟風險公司。最後，實證結果指出投保D&O責任險有助提升公司實質選擇權價值。

並列關鍵字

董監事及重要職員責任保險 ； 投資效率性 ； 不確定性 ； 波動性 ； 實質選擇權

參考文獻

Almeida, H., M. Campello, and M. S. Weisbach. 2011. Corporate financial and investment policies when future financing is not frictionless. Journal of Corporate Finance 17 (3): 675-693.

Arena, M., and B. Julio. 2015. The effects of securities class action litigation on corporate liquidity and investment policy. Journal of Financial and Quantitative Analysis 50 (1-2): 251-275.

Baker, T., and S. J. Griffith. 2006. The missing monitor in corporate governance: The directors’ & officers’ liability insurer. Georgetown Law Journal 95 (6): 1795-1842.

Bargeron, L. L., K. M. Lehn, and C. J. Zutter. 2010. Sarbanes-Oxley and corporate risk-taking. Journal of Accounting and Economics 49 (1-2): 34-52.

Bhagat, S., J. A. Brickley, and J. L. Coles. 1987. Managerial indemnification and liability insurance: The effect on shareholder wealth. Journal of Risk and Insurance 54 (4): 721-736.