Abstract

http://ssrn.com/abstract=1722289
 
 

References (19)



 


 



Directors, Directors and Officers Insurance and Corporate Governance


Li-Ming Han (Deceased)


The Chinese University of Hong Kong (CUHK) - Department of Finance

Richard D. MacMinn


Illinois State University

Yayuan Ren


Illinois State University-College of Business

December 8, 2010


Abstract:     
This article models a board of directors consisting of either pure directors or shareholder directors. Different from pure directors, shareholder directors own equity of the firm in addition to receiving directors’ fee. The model reaches a conclusion that if directors owe their appointments to the CEO, both pure and shareholder directors tend to endorse CEO’s decisions unless they can form a majority to counter‐balance the CEO. It shows that D&O insurance does not change directors’ decisions to follow the CEO but affects their decisions to accept the job. The analysis also shows that when the board is made up of only shareholder directors who have equal equity and liability stakes in the firm, the board will move the CEO’s decision toward one that maximizing shareholders’ value.

Number of Pages in PDF File: 18

Keywords: Directors, Directors and Officers Insurance, Corporate Governance

JEL Classification: G34, G22

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Date posted: December 10, 2010  

Suggested Citation

Han (Deceased), Li-Ming and MacMinn, Richard D. and Ren, Yayuan, Directors, Directors and Officers Insurance and Corporate Governance (December 8, 2010). Available at SSRN: http://ssrn.com/abstract=1722289 or http://dx.doi.org/10.2139/ssrn.1722289

Contact Information

Li-Ming Han (Deceased)
The Chinese University of Hong Kong (CUHK) - Department of Finance
Shatin, N.T.
Hong Kong
Richard D. MacMinn (Contact Author)
Illinois State University ( email )
Normal, IL 61790
United States
Yayuan Ren
Illinois State University-College of Business ( email )
Normal, IL
United States
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