| Recently,Shanghai DZH Limited shareholders subrogation recovery company five directors,supervisors and executives,received 335 million compensation.All urge A-share listed companies to pay more and more attention to D&O insurance.Current studies on D&O mainly focus on its economic consequences on corporate governance and corporate decision-making.Therefore,from the perspective of macro economy,this paper quantitatively studies how risks brought by economic policy uncertainty affect D&O insurance of enterprises purchasing decision.Based on the economic policy uncertainty index of China’s provinces,this paper empirically analyzes whether economic policy uncertainty influence the demand for D&O insurance and how influence it by taking the data of Chinese A-share listed companies purchasing D&O insurance from 2009 to 2017 as samples.The results show that the uncertainty of economic policies significantly promotes the demand for D&O insurance.According to the further analysis of micro mechanism,on the one hand,in enterprises with low risk bearing capacity,the increase of economic policy uncertainty leads to insufficient investment and increased financing cost,thus promoting the purchase of directors’ and executives’ liability insurance.On the other hand,for companies with a large proportion of female executives,the rising uncertainty of economic policies decreases the risk tolerance of management,thus increasing the demand of enterprises for D&O insurance.The final results are robust.At the same time,this paper further analyzes the heterogeneity.The results show that state-owned enterprises,with lower proportion of ownership by management and stronger effectiveness of internal control,state-owned enterprises have a greater demand for directors’ and executives’ liability insurance when the uncertainty of economic policy rises.The research has enriched the relevant literature on the influencing factors of D&O insurance demand.At the same time,it also enriches the microeconomic consequence of economic policy uncertainty.This paper studies with strong practical significance.First of all,the study is helpful for enterprises to improve their awareness of risk management.Secondly,In the period of frequent macroeconomic fluctuations,the government can formulate relevant policies to encourage companies to purchase D&O insurance to hedge risks.How to solve the problem of enterprise risk management caused by macro policy fluctuations and the increase of decision-making risk faced by the management is a new solution from the perspective of D&O insurance. |
