The demand for directors' and officers' insurance by large UK companies
By: O'SULLIVAN, Noel
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Material type: 
ArticlePublisher: 2001Subject(s): D&O insurance | Liability | Governança Corporativa | Non-executive directorsEuropean Management Journal 20, 5, p. 574-583Abstract: This paper investigates why large public companies in the UK purchase liability insurance for their directors and officers (D&O). Previous research suggests that companies may purchase D&O insurance for three reasons: (1) as part of their corporate for insurance programme, (2) due to demand from directors, and (3) as part of an optimal governance arrangement. This study test each of these hypothses on a sample of large UK companies. The empirical analysis is facilitated by UK companies. The empirical analysis is facilitated by UK legislation obliging companies to disclose the existence of a corporate-funded D&O policy. The empirical analysis finds that insured companies are larger, are more exposed to US litigation, experience greater share price risk, exhibit lower levels of managerial ownership, and possess greater non-executive representation on their boards than uninsured companies. These findings provide some support for all three motivations for possessing D&O insurance but the demands of individual directors and governance seem particularly important
| Item type | Current location | Collection | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Periódico | Biblioteca Graciliano Ramos | Periódico | Not for loan |
This paper investigates why large public companies in the UK purchase liability insurance for their directors and officers (D&O). Previous research suggests that companies may purchase D&O insurance for three reasons: (1) as part of their corporate for insurance programme, (2) due to demand from directors, and (3) as part of an optimal governance arrangement. This study test each of these hypothses on a sample of large UK companies. The empirical analysis is facilitated by UK companies. The empirical analysis is facilitated by UK legislation obliging companies to disclose the existence of a corporate-funded D&O policy. The empirical analysis finds that insured companies are larger, are more exposed to US litigation, experience greater share price risk, exhibit lower levels of managerial ownership, and possess greater non-executive representation on their boards than uninsured companies. These findings provide some support for all three motivations for possessing D&O insurance but the demands of individual directors and governance seem particularly important
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