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<p>This paper investigates how directors’ and officers’ liability insurance (D&amp;O insurance) functions as a policy-embedded accountability mechanism in Chinese state-owned enterprises (SOEs). Using a balanced panel of A-share listed SOEs in Shanghai and Shenzhen from 2010 to 2021, and adopting the regulator-endorsed Hexun corporate social responsibility (CSR) index, we find that D&amp;O insurance coverage significantly improves CSR performance, with an effect size roughly twice that documented for the broader ESG sample in prior studies. Going beyond traditional governance explanations, we identify and empirically validate three SOE-specific mechanisms: political-promotion incentives (driven by cadre evaluation), reputation-strategic pay-offs, and continuous insurer monitoring. These mechanisms clarify why D&amp;O insurance operates not only as a market tool but also as a high-salience political compliance signal within China’s unique hybrid institutional environment. In contrast, D&amp;O insurance has no significant effect among non-SOEs. Our findings reconceptualise D&amp;O insurance as a strategic device for embedding state objectives into corporate behaviour, offering a theoretical and empirical benchmark for similar hybrid governance systems worldwide.</p>

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How does directors’ and officers’ liability insurance affect the fulfilment of social responsibility by state-owned enterprises?

  • 期刊论文

  • 发表日期：

    2025年9月19日

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  • Ruiyun Wanyan,
  • Ying Sun,
  • Lingyan Suo,
  • Tongpu Zhao

摘要

This paper investigates how directors’ and officers’ liability insurance (D&O insurance) functions as a policy-embedded accountability mechanism in Chinese state-owned enterprises (SOEs). Using a balanced panel of A-share listed SOEs in Shanghai and Shenzhen from 2010 to 2021, and adopting the regulator-endorsed Hexun corporate social responsibility (CSR) index, we find that D&O insurance coverage significantly improves CSR performance, with an effect size roughly twice that documented for the broader ESG sample in prior studies. Going beyond traditional governance explanations, we identify and empirically validate three SOE-specific mechanisms: political-promotion incentives (driven by cadre evaluation), reputation-strategic pay-offs, and continuous insurer monitoring. These mechanisms clarify why D&O insurance operates not only as a market tool but also as a high-salience political compliance signal within China’s unique hybrid institutional environment. In contrast, D&O insurance has no significant effect among non-SOEs. Our findings reconceptualise D&O insurance as a strategic device for embedding state objectives into corporate behaviour, offering a theoretical and empirical benchmark for similar hybrid governance systems worldwide.