Abstract

http://ssrn.com/abstract=1571752
 
 

References (31)



 
 

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Is Corporate Governance Risk Valued? Evidence from Directors’ and Officers’ Insurance


Lea Henny Stern


Syracuse University - Department of Finance

M. Martin Boyer


HEC Montreal - Department of Finance

October 15, 2011

Journal of Corporate Finance, Vol. 18, No. 2, 2012

Abstract:     
We find that common equity firms pay lower D&O insurance premiums than income trusts, an alternative and riskier ownership form. This result has wide-ranging implications for investors insofar as the information provided by D&O insurers provides investors with an unbiased signal of the firm’s governance risk. The signal is unbiased because it comes from an entity (i.e. the insurer) that has a direct financial incentive to correctly assess an organization’s governance risk, in contrast to other ad hoc governance measures and indices.

Number of Pages in PDF File: 54

Keywords: Corporate governance, D&O insurance, Initial public offerings, Income trusts

JEL Classification: G34, G22, J44, G32


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Date posted: March 18, 2010 ; Last revised: August 10, 2015

Suggested Citation

Stern, Lea Henny and Boyer, M. Martin, Is Corporate Governance Risk Valued? Evidence from Directors’ and Officers’ Insurance (October 15, 2011). Journal of Corporate Finance, Vol. 18, No. 2, 2012. Available at SSRN: http://ssrn.com/abstract=1571752 or http://dx.doi.org/10.2139/ssrn.1571752

Contact Information

Lea Henny Stern
Syracuse University - Department of Finance ( email )
United States
M. Martin Boyer (Contact Author)
HEC Montreal - Department of Finance ( email )
3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada
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