The directors' and officers' insurance premium: an outside assessment of the quality of corporate governance
Year: 2000
Type: article
Abstract: Using a sample of D&O premiums gathered from the proxy statements of Canadian companies, this article examines the D&O premium as a measure of ex ante litigation risk. I find a significant association between D&O premiums and variables that proxy for the quality of firms' governance structures. The association between the proxies for governance structure quality and D&O premiums is robust to a number of alternative specifications. This article provides confirmatory evidence that the D&O premium reflects the quality of the firm's corporate governance by showing that measures of weak governance implied by the D&O premium are positively related to excess CEO compensation. The overall results suggest that D&O premiums contain useful information about the quality of firms' governance.
Author: J. Core
Institution: University of Pennsylvania
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3124020978