a b s t r a c tThis paper examines the demand for directors' and officers' liability insurance (D&O insurance) by Chinese listed companies where controlling-minority shareholder incentive conflicts are acute due to the concentrated and split ownership structure. We hypothesize and find evidence that the incidence of seeking D&O insurance is positively related to the extent of controlling-minority shareholder incentive conflicts -a finding not previously documented in the literature. Using an event study, we find that the announcements of D&O insurance decisions in firms that engage in earnings management, and/or are controlled by a local government (such firms tend to have stronger incentives to tunnel), seem to have a negative wealth effect. In addition, the incidence of the D&O insurance decision is positively related to the proportion of independent directors and several litigation risk proxies. Therefore, the breakthrough in corporate governance and judicial reforms has created non-negligible perceived securities litigation risks in China.

No abstract

extract] The PRC Law of Securities was enacted to promote financing and circulation of commodities, safeguard fulfillment of obligations and advance the development of the socialist market economy (Art 1). The Law is divided into seven chapters consisting of 96 articles. It clearly distinguishes a mortgage from a pledge and regards them as two different types of security interests. The forms of security interests provided for in the Law are guarantee, mortgage, pledge, lien and deposit (Art 2).The aim of this paper is to discuss some of the salient features of the security interests provided for in the Law. Reference will also be made to provisions in other relevant legislation recently promulgated in China.

No abstract

No abstract