Does Managerial Legal Liability Affect Corporate Diversification?

Abstract

本文檢測董監及重要職員責任保險（D&O 保險）對公司多角化與公司價值的影響。D&O 保險促使管理人員承擔風險並降低多角化，然而，D&O 保險亦可能促使管理人員侵佔公司利益進而建立企業帝國。由於較高的D&O 保險能保護管理人員來自市場的懲戒，並惡化管理人員機會主義的代理問題，本文認為管理人員可能採取較高程度的多角化並傷害公司價值。本文以2008-2014 年之1,332 家臺灣上市公司為樣本，研究發現超額D&O 保險與較高的多角化程度有關，特別是無關多角化。再則，本文發現公司多角化，特別是無關多角化，會降低有超額D&O 保險之公司的價值。本文的結果證實在台灣的背景下，D&O 保險會影響公司多角化與公司價值。因此，D&O 保險對股東而言，在制定投資決策上是一項有用的資訊來源。而本研究亦提供政策制定者在管理D&O 保險與相關揭露上有更深入的了解。

We examine the effect of directors’ and officers’ liability insurance (D&O insurance) on corporate diversification and firm value. D&O insurance can encourage managers to take risks and lower diversification, but it can also entrench managers and lead to empire building. Because higher D&O insurance coverage shields managers from market discipline and exacerbates agency problems associated with managerial opportunism, we argue that managers are more likely to exhibit higher levels of diversification that destroy shareholders’ value. Using archival data from a sample of 1,332 Taiwanese listed firms in the period 2008-2014, we find that excess D&O insurance coverage is associated with higher levels of corporate diversification, more specifically, unrelated diversification. In addition, we find that corporate diversification, and unrelated diversification in particular, reduces firm value for firms with excess D&O coverage. Our results show that, in the context of Taiwan, D&O insurance affects diversification and firm value. Therefore, D&O insurance is a useful source of information for shareholders when they make investment decisions. In addition, this study offers insights for policy makers who are interested in regulating D&O insurance and its related disclosures.