The Effect of DO Insurance on Managerial Risk Taking

Beschrijving

Risk taking in business contributes towards innovation. Yet excessive risk taking is associated with corporate failure. Many authors have analysed the relationship between personal liability rules of managers and excessive risk taking. In this context, previous researchers have often argued that insurance against personal liability of the manager DO insurance would weaken the managers incentive to take care. brbrHowever, little is known about the workings and effects of DO insurance. This book analyses how DO insurance should work ideally and how it currently works in the USA, the UK, the Netherlands and Germany. brbrIt illustrates how DO insurance threatens but also benefits society and the economy. In fact, a properly functioning DO insurance system can more elegantly incentivize adequate risk taking than for example, direct regulation of managerial activity e.g. disqualification or the adoption of harsher liability rules. brbrThis book provides an overview of the implications of DO insurance, in particular to br- policy makers who can take concrete reform proposals from this book;br- investors who can increase their returns by using the information on corporate DO insurance policies;br- creditors who can better estimate their debtors default risk by understanding the debtors DO insurance policy; and br- finally, prospective insurers who can learn in depth about the DO market, the policy design and the DO risk.br