| Corporate risk taking reflects the choice of investment projects in the investment decision-making process.Higher risk-taking levels mean that managers are less likely to abandon high-risk investment projects with expected net present value greater than zero.Acemoglu and Zilibotti(1997)proposed that enterprise risk-taking is the fundamental driving force for sustained socio-economic growth;John et al.(2008)proposed that for micro-enterprises,a higher level of risk-taking is conducive to high return on investment.In the overall market,the overall higher risk-taking level helps to increase social productivity and achieve long-term sustainable economic development.However,in modern business operations,the separation of corporate ownership and management rights weakens managers’ willingness to take risks.They are more likely to evade risks for private gains,which is not conducive to the long-term development of enterprises and the economy in the long run.The director’s executive liability insurance can provide protection for " misconduct"(including negligence,mistakes,misleading statements and breach of duties)under the normal performance of the manager,relieve his worries,encourage him to work diligently,and make positive decisions,but It is also possible to amplify its moral hazard,resulting in a decline in company performance,a deterioration in governance,and a more cautious investment.And because China’s economy and legal system are still not perfect,and the protection mechanism of small and medium-sized investors is not sound,the insurance coverage rate of directors’ executive liability insurance is not as high as that of developed countries in the West.The impact of purchasing director executive liability insurance on enterprises is mixed.In order to study the role of directors’ executive liability insurance in enterprise risk-taking,this paper uses the data of all Shanghai-Shenzhen A-share non-financial listed companies from 2008 to 2017,and uses the propensity score matching method to match the processing group data one-to-one.Multivariate ols regression was performed after the model’s self-selection bias problem.The empirical results show that the directors’ liability insurance can help to improve the risk-taking level of the company;according to the average of the concentration of equity concentration,the sample is grouped and returned.It is found that in the enterprises with more scattered equity,the executive liability insurance of the directors has a stronger role in promoting the risk exposure of the enterprise;According to the average value of the degree of marketization of the financial industry in each region,the group’s financial marketization degree is deepened,which is found to be beneficial to improve the risk-taking level of enterprises.however,it is an alternative to the directors’ liability insurance to promote enterprises to undertake risk-taking,that is,the deepening of the marketization of the financial industry will weaken the promotion of directors’ liability insurance to the risk-taking of enterprises.By further controlling the endogeneity of the model,replacing the enterprise risk-bearing metrics,changing the measurement of the rolling years of the enterprise risk-bearing variables,and increasing the number of matching of the observations of the processing group,the results are still stable.The research significance of this paper is theoretically that scholars’ research on directors’ liability insurance has focused on company performance(Hu Guoliu,2014),agency costs(Xu Rong and Wang Jie,2012),and stock price performance(Boyer et al.,2014).There are fewer documents linking it to the level of corporate risk taking,this paper studies the influence of directors’ liability insurance on corporate risk-taking by propensity score matching method,and reveals the promotion effect of directors’executive liability insurance on enterprise risk-taking,and from the concentration of equity and the degree of marketization of financial industry.A perspective that has not been paid attention by scholars in the past has explored the heterogeneity of its role and expanded the theoretical research on the directors’ liability insurance and corporate risk-taking.The study found that in companies with low shareholdings and low marketization in the regional financial industry,director executive liability insurance has a stronger role in promoting corporate risk-taking,which is conducive to enterprises to purchase directors’ executive liability insurance in light of their actual situation;in accordance with the heterogeneity of its role,insurance companies position their marketing strategies,improve their insurance products,and further develop directors’ liability insurance. |
