Research output

The effect of D&O insurance on managerial risk taking

Research output: ThesisDoctoral ThesisInternal

Associated researcher

  • Gaber, M.

Associated organisations

Abstract

Excessive risk taking of managers is associated with corporate failure. Researchers argue that insurance against personal liability of a manager (Directors and Officers liability insurance) would weaken his incentive to take care and partly causes excessive risk taking. Because only little is actually known about D&O insurance, this thesis analyses how D&O insurance should work ideally and how it currently works. This thesis observes that: (i) The value of investment decisions seems to rise with D&O coverage when competitive pressure is high enough; (ii) the insured manager benefits banks, provided that the corporation purchases an average insurance coverage; (iii) the D&O insurer settles disputes differently than courts, taking into account the degree of bad publicity in the media; and (iv) in times of financial instability, D&O insurance is the best analysed compensation measure in safeguarding firm performance. Hence, smaller corporations that do not carry D&O insurance yet would greatly benefit from it.

    Research areas

  • D&O insurance, manager liability, risk taking, corporate liability, risk aversion

Documents

  • Full Text

    Final published version, 2 MB, PDF-document

  • Cover

    Final published version, 39 KB, image/jpeg

  • Abstract

    Final published version, 668 KB, PDF-document

  • Propositions

    Final published version, 45 KB, PDF-document

  • Valorisation

    Final published version, 667 KB, PDF-document

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Details

Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
  • Maastricht University
Supervisors/Advisors
Award date23 Sep 2015
Publisher
  • Intersentia
Print ISBNs9781780683485
Publication statusPublished - 2015