Directors' And Officers' Liability Insurance,Executive Power And Information Disclosure Quality

The usefulness of accounting information is an eternal topic in the study of accounting theory.With the development of modern economic society,the usefulness of accounting information is gradually applied to all levels of the market economy(Ball and Brown,1968).As the premise of the usefulness of accounting information,the quality of corporate information disclosure plays a vital role in ensuring the normal operation of the market economy.From a micro perspective,the quality of information disclosure is the main reliance of the capital market and external stakeholders on the company's operating status and safeguarding its own rights and interests.How to effectively improve the quality of information disclosure has become one of the hot topics of common concern in the academic and practical circles.As far as research is concerned,from the macro legal environment to the implementation of national policies(Porta et al.,1998;Healy and Palepu,2001),from industry competition to corporate governance(Darrough,1993;Rayo and Segal,2010;Hennalin and Weisbach),2012),from the company's internal power structure to management characteristics(Fan and Wong,2002;Baginski et al.,2002;Lambert et al.2007),can significantly affect the quality of corporate accounting information governance disclosure.As the actual decision-makers of the daily operation of the company,the company's executives will make different financial and operational decisions under different power structures.Further,does the behavior of corporate executives in different power environments affect the quality of company information disclosure?What is its internal mechanism and basic path?What are the characteristics and differences of the above logic in the Chinese context?Based on the Chinese scenario,the article will systematically examine the functional positioning,logical path and essential Iaws of executive power in the quality of corporate information disclosure from the perspective of the internal and external information environment and manager flexibility of contemporary companies.This paper takes the Shanghai-Shenzhen A-share listed company from 2003 to 2017 as a sample,and intends to explore the role of executive power in the quality of corporate information disclosure and its impact mechanism,considering that Director's and Officers' Liability Insurance has“respecting”and“supervising”managerial behavior.The role of the article will further analyze the interactive influence of executives with different powers on the quality of corporate information disclosure in the context of the subscription of Director's and Officers' Liability Insurance.The research results show that the greater the structural power,that is,when the general manager and the chairman are combined,the role of the supervisory layer will be weakened due to the overlapping of the power of the management and the supervisory layer,so the quality of corporate information disclosure will be lower;The greater the ownership power,that is,the executives' holdings will strengthen their control over the company,and thus may use control to encroach on the interests of shareholders,increase the agency cost of enterprises,and reduce the quality of information disclosure.The greater the power of experts,the theory in the field Authority,the professional ability of executives will effectively reduce the probability of their decision-making mistakes,and thus effectively improve the quality of corporate information disclosure.And the above conclusions are still stable after some column robustness tests including propensity score matching and instrumental variables.Further,after considering the regulatory role of Director's and Officers' Liability Insurance on the relationship between executive power and corporate information disclosure quality,we found that Director's and Officers' Liability Insurance mainly shows positive governance effects in corporate governance in China,that is,corporate subscription of Director's and Officers' Liability Insurance can significantly improve the quality of information disclosed by executives in different power contexts.The conclusions of this paper indicate that in the information environment of Chinese companies,strengthening and improving the information disclosure system of listed companies and establishing a strict information disclosure and punishment mechanism can effectively improve the cost of corporate violations,and thus improve the quality of information disclosure and the level of investor protection.At the same tine,the regulatory body should establish the CSRC as the core,centralized agencies,the public and the mainstream media's supervision mechanism to improve corporate information disclosure channels and enhance corporate information identification capabilities.Furthermore,strengthen and improve the internal governance mechanism of listed companies,restrain the violations of self-interest by executives,and improve and strengthen the regulatory effectiveness of the board of directors of listed companies.Finally,actively guide enterprises to subscribe and claim mechanisms for Director's and Officers' Liability Insurance,and improve corporate governance structure.The article provides a new idea for the distribution and design of corporate executives' power,and also confirms the different influences of executive heterogeneity on corporate governance from the perspective of information disclosure.In addition,it also helps us to fully understand the positive role of director executive liability insurance in corporate governance,and is of great significance for improving and promoting the use of Director's and Officers' Liability Insurance in the Chinese executive market.Finally,it provides information based on corporate governance to improve China's information disclosure system.