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Article: Controlling-minority shareholder incentive conflicts and directors' and officers' liability insurance: Evidence from China

TitleControlling-minority shareholder incentive conflicts and directors' and officers' liability insurance: Evidence from China
Authors
KeywordsChina
D&O Insurance
Expropriation
Private Securities Litigation
Tunneling
Issue Date2008
PublisherElsevier 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?
AbstractThis 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 Identifierhttp://hdl.handle.net/10722/188458
ISSN
2015 Impact Factor: 1.485
2015 SCImago Journal Rankings: 1.264
SSRN
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorZou, Hen_US
dc.contributor.authorWong, Sen_US
dc.contributor.authorShum, Cen_US
dc.contributor.authorXiong, Jen_US
dc.contributor.authorYan, Jen_US
dc.date.accessioned2013-09-03T04:07:43Z-
dc.date.available2013-09-03T04:07:43Z-
dc.date.issued2008en_US
dc.identifier.citationJournal Of Banking And Finance, 2008, v. 32 n. 12, p. 2636-2645en_US
dc.identifier.issn0378-4266en_US
dc.identifier.urihttp://hdl.handle.net/10722/188458-
dc.description.abstractThis 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.languageengen_US
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jbfen_US
dc.relation.ispartofJournal of Banking and Financeen_US
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.rightsNOTICE: 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.subjectChinaen_US
dc.subjectD&O Insuranceen_US
dc.subjectExpropriationen_US
dc.subjectPrivate Securities Litigationen_US
dc.subjectTunnelingen_US
dc.titleControlling-minority shareholder incentive conflicts and directors' and officers' liability insurance: Evidence from Chinaen_US
dc.typeArticleen_US
dc.identifier.emailZou, H: hongzou@hku.hken_US
dc.identifier.authorityZou, H=rp01800en_US
dc.description.naturepostprinten_US
dc.identifier.doi10.1016/j.jbankfin.2008.05.015en_US
dc.identifier.scopuseid_2-s2.0-55149094310en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-55149094310&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume32en_US
dc.identifier.issue12en_US
dc.identifier.spage2636en_US
dc.identifier.epage2645en_US
dc.identifier.isiWOS:000261352300015-
dc.publisher.placeNetherlandsen_US
dc.identifier.ssrn1652174-
dc.identifier.scopusauthoridZou, H=12769328900en_US
dc.identifier.scopusauthoridWong, S=7404590456en_US
dc.identifier.scopusauthoridShum, C=24462608500en_US
dc.identifier.scopusauthoridXiong, J=24462885800en_US
dc.identifier.scopusauthoridYan, J=55467720200en_US

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