Research On The Impact Of Directors And Executives Liability Insurance On Goodwill Impairmen

In recent years,the "Thunderstorm" of goodwill impairment has occurred frequently.The management hides the bad news of goodwill impairment by hiding the non-compliance of M &a performance and earnings management manipulation,resulting in the concentrated outbreak of accumulated hidden dangers.Large scale goodwill impairment will not only strike the confidence of shareholders and other stakeholders,but also seriously hinder the healthy and stable development of China’s capital market.According to the "enterprise supervision risk tip No.8-goodwill impairment" issued by the CSRC in 2018,listed companies should strictly follow the company’s rules and regulations and internal authorization approval regulations,implement the internal approval process for the provision of goodwill impairment,timely test and disclose the impairment of goodwill,so as to more accurately reflect the fair value of goodwill and improve the quality of accounting information in financial reports.However,the goodwill impairment indicator,which indicates that the M &A fails to meet the expectations and the management’s ability is insufficient,may become a tool for the management of listed companies to carry out financial manipulation.In order to improve the stock price and maintain its reputation,the management has the motivation to hide bad news and deliberately make less or no provision for goodwill impairment by taking advantage of the difficulty of verification of goodwill impairment.Because there are a lot of artificial judgments in the impairment test of enterprise goodwill,it provides an opportunity for the management to manipulate the profits through their own discretion in order to realize their personal interests.Goodwill impairment test has a large discretionary space,so whether the management,as the main person responsible for the enterprise’s operating quality and operating results,can restrict its self-interest behavior and make it better fulfill its obligations of "loyalty" or "diligence" will have a significant impact on the enterprise’s operating results and risk control.Dong liability insurance was introduced into China as an external supervision mechanism in 2002.There have been three effect hypotheses in academia: one is incentive effect hypothesis;The second is the external supervision hypothesis;The third is the opportunistic hypothesis.As an emerging external supervision mechanism,what impact will it have on the impairment of corporate goodwill? This paper selects the financial data of China’s Shanghai and Shenzhen A-share non-financial listed companies from 2007 to 2020,studies from the perspective of external supervision mechanism,combined with the three hypotheses of directors’ liability insurance,explores the relationship between directors’ liability insurance and enterprise goodwill impairment,and makes further research and Analysis on the relationship between them.It is found that companies that buy directors’ liability insurance tend to make less provision for goodwill impairment,which reduces the timeliness of goodwill impairment provision,that is,it verifies the opportunistic motivation effect of directors’ liability insurance.After a variety of robustness tests,the above conclusion is still valid;Through the intermediary effect test,it is found that the purchase of directors’ liability insurance will aggravate the explicit self-interest behavior of management,thus affecting the impairment of goodwill;The heterogeneity test found that in private enterprises,enterprises with good legal environment and weak internal and external supervision and restraint mechanism,the negative effect of purchasing directors’ liability insurance on goodwill impairment is more obvious;Based on the above conclusions,this paper puts forward relevant suggestions from the three levels of "government","company" and "investor".