The Effect of Directors´ and Officers´ Liability Insurance on Performance: Evidence from China

This paper investigates the impact of the purchase of directors´ and officers´ liability insurance on performance in some listed Chinese companies. We found a significant positive cumulative abnormal return for the three-day window. Considering the firm characteristics, we found that firm size, leverage and the proportion of shares listed in overseas exchanges are significantly related with CAR. We also find that the behavior of purchase of the D&O insurance can provide additional information about the lower governance risk for shareholders.