How does D O insurance affect corporate environmental investment?
Directors’ and officers’ liability insurance (D&O insurance), an important tool for diversifying and transferring risks of managers, plays a crucial role in corporate investment decisions, including corporate environmental investment decisions. However, the relationship between D&O insurance...
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Published in | Frontiers in environmental science Vol. 10 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Frontiers Media S.A
02.09.2022
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Subjects | |
Online Access | Get full text |
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Summary: | Directors’ and officers’ liability insurance (D&O insurance), an important tool for diversifying and transferring risks of managers, plays a crucial role in corporate investment decisions, including corporate environmental investment decisions. However, the relationship between D&O insurance and corporate environmental investment remains unknown. Using a sample of Chinese listed firms, this study examines whether and how D&O insurance affects corporate environmental investment from 2008 to 2019. We find that D&O insurance is negatively associated with corporate environmental investment. This result is consistent with the results of a series of robustness tests. Further analyses show that D&O insurance impedes corporate environmental investment by driving executives to seek private benefits, especially monetary benefits. Moreover, the negative effect of D&O insurance on corporate environmental investment is more pronounced in low-polluting and highly competitive industries. However, this negative relationship is mitigated by political connections. The findings contribute to the literature by providing empirical evidence of the involvement of D&O insurance in influencing corporate environmental investment decisions. |
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ISSN: | 2296-665X |
DOI: | 10.3389/fenvs.2022.960097 |