임원배상책임보험과 기업의 위험 추구

This study examines the effect of directors’ and officers’ liability (D&O) insurance on the firm’s risk-taking behavior. D&O insurance changes the liability risk of managers and directors, and can affect their behaviors in corporate decision making. On one hand, D&O insurance may reduce the incentives of managers to act in the best interest of the shareholders. If this is the case, D&O insurance can lead to greater managerial opportunism, which can cause firms with D&O insurance taking less risk and exhibiting myopic investment behavior. On the other hand, D&O insurance also protects the mangers from the downside risk stemming from a project failure. If this is the case, managers of insured firms can become less risk-averse and more likely to take risky projects. To empirically test the two possibilities, we utilize a period in Korea during which the disclosure of D&O insurance information was mandatory. We find that, controlling for the endogeneity of D&O insurance coverage, firms that are covered by D&O insurance show greater future stock return volatility and R&D intensity. These results show that D&O insurance increases the firm’s risk-taking behavior and imply that D&O insurance can be beneficial to firms by mitigating the risk-averseness of managers.