The Demand Of D&O Insurance:Based On Board Seats

This paper is expected to combine the specific background of China and start from the perspective of the internal company to study the demand motivation of listed companies for D&O insurance,so as to test and improve the relevant theories of D&O insurance.This paper takes all A-share listed companies from 2007 to 2019 as research samples,and with the support of principal-agent theories,draws the following conclusions through empirical tests.After controlling for other factors that affect the purchase of D&O insurance,there is a significant negative correlation between the board seats ratio of the actual controller and the demand of buying D&O insurance.Companies with low control of the actual controller’s board of directors are more likely to buy this insurance than companies with high control of the board of directors.To some extent,this indicates that the actual controller artificially strengthens the control of the board of directors and has the motivation to reduce the enthusiasm of the independent directors to perform their duties.Therefore,they are willing to buy professional liability insurance for them to reduce their risk perception,and this influence will exist for a long time.The reliability of the above conclusions has been tested by the alternative variable method,the instrumental variable method and the propensity score matching method.In the further study,in order to study the possible influence of insider control in the company where the actual controller is the state,the moderating effect of the combination of two jobs on the actual controller’s board seat ratio on D&O insurance purchase was explored.This paper finds that when the actual controller is the state,companies with low degree of board control by the actual controller are more inclined to purchase D&O insurance than companies with high degree of board control.In addition,in the companies with the combination of two jobs,although the regression coefficient between the actual controller’s board seat ratio and the company’s purchase of D&O insurance is negative,there is no statistically significant relationship.The regression coefficient between the actual controller’s board seat ratio and the company’s purchase of D&O insurance has a significant relationship at the level of 1%in the company that is not a combination of two jobs.It shows that when the company is under the control of insiders,the ratio of board seats of actual controllers has little influence on the purchase of D&O insurance.The study of this paper has enriched the discussion about the company’s demand for directors’ and executives’ liability insurance,and also put forward policy suggestions from two aspects of legal system construction and industry supervision.