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- Publisher Website: 10.1016/j.jacceco.2019.01.001
- Scopus: eid_2-s2.0-85065048850
- WOS: WOS:000503094700008
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Article: Is skin in the game a game changer? Evidence from mandatory changes of D&O insurance policies
Title | Is skin in the game a game changer? Evidence from mandatory changes of D&O insurance policies |
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Authors | |
Keywords | Accruals D&O liability insurance Deductible Firm value Legal liability |
Issue Date | 2019 |
Publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jae |
Citation | Journal of Accounting and Economics, 2019, v. 68 n. 1, article no. 101225 How to Cite? |
Abstract | This paper examines the incentive effects of a mandatory personal deductible in liability insurance contracts for directors and officers (D&Os). Exploiting a novel German law that mandates personal deductibles for executives, we document positive returns for affected firms around the first announcement of the plan to impose a personal deductible. We also find evidence of long-run effects: affected firms decrease risk taking in operational activities and financial reporting, and improve the quality of takeover decisions. Our study shows that the structure of D&O insurance contracts matters because mandating that D&Os have “skin in the game” appears to lead to real effects on firm value. © 2019 Elsevier B.V. |
Persistent Identifier | http://hdl.handle.net/10722/274505 |
ISSN | 2023 Impact Factor: 5.4 2023 SCImago Journal Rankings: 8.337 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Lin, C | - |
dc.contributor.author | Officer, MS | - |
dc.contributor.author | Schmid, T | - |
dc.contributor.author | Zou, H | - |
dc.date.accessioned | 2019-08-18T15:03:01Z | - |
dc.date.available | 2019-08-18T15:03:01Z | - |
dc.date.issued | 2019 | - |
dc.identifier.citation | Journal of Accounting and Economics, 2019, v. 68 n. 1, article no. 101225 | - |
dc.identifier.issn | 0165-4101 | - |
dc.identifier.uri | http://hdl.handle.net/10722/274505 | - |
dc.description.abstract | This paper examines the incentive effects of a mandatory personal deductible in liability insurance contracts for directors and officers (D&Os). Exploiting a novel German law that mandates personal deductibles for executives, we document positive returns for affected firms around the first announcement of the plan to impose a personal deductible. We also find evidence of long-run effects: affected firms decrease risk taking in operational activities and financial reporting, and improve the quality of takeover decisions. Our study shows that the structure of D&O insurance contracts matters because mandating that D&Os have “skin in the game” appears to lead to real effects on firm value. © 2019 Elsevier B.V. | - |
dc.language | eng | - |
dc.publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jae | - |
dc.relation.ispartof | Journal of Accounting and Economics | - |
dc.subject | Accruals | - |
dc.subject | D&O liability insurance | - |
dc.subject | Deductible | - |
dc.subject | Firm value | - |
dc.subject | Legal liability | - |
dc.title | Is skin in the game a game changer? Evidence from mandatory changes of D&O insurance policies | - |
dc.type | Article | - |
dc.identifier.email | Lin, C: chenlin1@hku.hk | - |
dc.identifier.email | Schmid, T: schmid@hku.hk | - |
dc.identifier.email | Zou, H: hongzou@hku.hk | - |
dc.identifier.authority | Lin, C=rp01808 | - |
dc.identifier.authority | Schmid, T=rp02028 | - |
dc.identifier.authority | Zou, H=rp01800 | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1016/j.jacceco.2019.01.001 | - |
dc.identifier.scopus | eid_2-s2.0-85065048850 | - |
dc.identifier.hkuros | 301396 | - |
dc.identifier.volume | 68 | - |
dc.identifier.issue | 1 | - |
dc.identifier.spage | article no. 101225 | - |
dc.identifier.epage | article no. 101225 | - |
dc.identifier.isi | WOS:000503094700008 | - |
dc.publisher.place | Netherlands | - |
dc.identifier.issnl | 0165-4101 | - |