Directors’ And Officers’ Liability Insurance And Corporate Accounting Information Transparency

High transparency of accounting information is an significant basis for the sound advancement of capital market and efficient operation of social economy.However,in2020,Luckin’s senior executives forged transactions worth 2.2 billion yuan,and their financial fraud was exposed by short sellers,resulting in a sharp drop in stock price,suspension of the company’s management,and a collective lawsuit by investors.The Luckin Coffee financial fraud incident has brought a great impact on the capital market,which shows that in today’s capital market,there are still problems such as opaque accounting information,low quality of internal control and moral hazard in the company.For the past few years,financial fraud events often happen which has attracted the attention of the government and regulatory agencies.The relevant domestic legal system is also being gradually improved,especially the implementation of the new securities law,which significantly increases the cost of securities violations and makes the performance risk of the management significantly increase,and the imbalance between returns and risks induces the moral hazard of the management.Therefore,some enterprises choose to purchase directors’ senior executives’ liability insurance to share risks for the management,which can solve the management’s worries and alleviate the principal-agent problem,at the same time,it can also play a role in intensifying external inspection and enhancing the quality of internal control of companies,which may further affect the transparency of accounting information of company.However,a small number of savants have investigated the D&O insurance and the transparency of corporate accounting information.Based on this,this thesis choose the listed enterprises in chinese Stock markets from 2007 to 2021 as the research target,combined with the insurance theory,authorized procuration theory and unequal message theory,tested the influence of D&O insurance on the transparency of enterprise accounting information and the influence path.Research findings the purchase of D&O insurance by listed companies plays a role of external supervision,which can remarkably enhance the transparency of enterprise accounting information.After somerobust check and endogeneity test,the paper’s ultimatenessis still correct,and empirically verifies the influence path of D&O insurance on the transparency of information by increasing the quality of built-in control.Moreover,this thesis makes grouping regression in the light of imparity internal and external conditions of enterprises,and finds that D&O insurance plays a stronger governance role and has a stronger boost influence on the transparency of enterprise accounting information in the enterprises whose property rights are state-owned,audited by "non-top ten " accounting firms,with higher administrator power and small institutional investors.The study of this thesis not only added the document about the interfering factors of accounting information transparency and made a beneficial exploration of the influence path of D&O insurance,but also give some evidence to the enterprises which want to purchase D&O insurance to boost the level of corporate governance and boost the transparency of accounting information.