| Summary: | 碩士 === 淡江大學 === 財務金融學系碩士班 === 104 === Directors’ and Officers’ liabilities insurance has received a lot of attention from practice and academics. D&O insurance not only can protect directors’ and officers’ interest but also outside shareholders. However, previous literature pointed that D&O insurance might lead to the opportunistic behavior for managers such that managers happen to moral hazard, resulting in a higher cost of debt. This study is aimed to examine the relation between D&O insurance and cost of debt. Using companies listed on Taiwan Stock Exchange and Taipei Exchange from 2008 to 2014, we find that firms with D&O insurance have higher loan spreads than those with no D&O insurance. Moreover, for firms with D&O insurance, the higher the converges, the higher the cost of debt is. Furthermore, we find that for firms with higher information asymmetry, having D&O insurance tends to enlarge. However, for company with lower information asymmetry, D&O insurance is not associated with cost of debt. Finally, we find that D&O insurance is negative relationship with cost of debt regardless the insurance policy provided by domestic or foreign insurance companies.
|
|---|
