Legal Liability Coverage and Voluntary Disclosure
研究超额董事高管责任保险和超额现金补偿是否影响企业自愿性信息披露的数量和质量，发现高覆盖企业更少发布坏消息预测，且对交叉上市企业影响更显著。
ABSTRACT: This paper examines whether legal liability coverage, as measured by excess Directors’ and Officers’ (D&O) liability insurance coverage and excess cash for indemnification, is associated with the quantity and the quality of a firm’s voluntary disclosures. Using Canadian firms whose D&O insurance data are publicly available, I find that firms with higher excess coverage are less likely to report bad news forecasts for the sample firms that are cross-listed in the U.S., and that the number of bad news forecasts decreases for large cross-listed sample firms having high litigation risk. The results are consistent with the litigation cost argument for the disclosure of bad news. I also find that higher excess liability coverage leads to disclosures of more precise bad news for the cross-listed sample firms and less timely disclosures of bad news for large cross-listed sample firms. Further, excess cash for indemnification is a more significant determinant of disclosure decisions.