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<p>Using a sample of Chinese A-listed companies from 2007 to 2023, we examine the impact of directors’ and officers’ liability insurance (D&amp;O insurance) on corporate accounting choices related to R&amp;D expenditures. Our results indicate that firms with D&amp;O insurance are more likely to capitalise R&amp;D expenditures. Mechanism analysis suggests that managers’ risk appetite serves as a key channel through which D&amp;O insurance promotes R&amp;D capitalisation. Furthermore, the effect is stronger when firms face higher financing and performance pressures, but weaker when internal and external monitoring mechanisms are more effective. Finally, we find that increased R&amp;D capitalisation due to D&amp;O insurance is associated with lower patent outputs, but has no significant impact on non-patent outputs. These findings highlight the role of D&amp;O insurance on R&amp;D accounting choices and contribute to the empirical literature on its broader consequences.</p>

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Directors’ and officers’ liability insurance and corporate R&D capitalisation: evidence from China

  • 期刊论文

  • 发表日期：

    2025年6月3日

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  • Ting Gao,
  • Xiaolong Ma

摘要

Using a sample of Chinese A-listed companies from 2007 to 2023, we examine the impact of directors’ and officers’ liability insurance (D&O insurance) on corporate accounting choices related to R&D expenditures. Our results indicate that firms with D&O insurance are more likely to capitalise R&D expenditures. Mechanism analysis suggests that managers’ risk appetite serves as a key channel through which D&O insurance promotes R&D capitalisation. Furthermore, the effect is stronger when firms face higher financing and performance pressures, but weaker when internal and external monitoring mechanisms are more effective. Finally, we find that increased R&D capitalisation due to D&O insurance is associated with lower patent outputs, but has no significant impact on non-patent outputs. These findings highlight the role of D&O insurance on R&D accounting choices and contribute to the empirical literature on its broader consequences.