Third-party auditor liability and financial restatements

We examine whether U.S. state-level third-party auditor liability (TPAL) regimes affect firms' financial restatement decisions. Using a sample of 34,409 firm-year observations from 2003 to 2018, we find that state-level TPAL is significantly negatively related to the likelihood of firm-level financial restatements. We also observe that the negative relationship between TPAL and financial restatements persists for a subsample of firms with income-increasing financial restatements and the ‘restatement of torts standard’ (one of the more expansive subgroups of TPAL). Using a difference-in-differences regression design, we find that an increase in state-level TPAL regimes strengthens the negative relationship between TPAL and the incidence of restatements. Our main finding remains robust across several sensitivity tests. Finally, we find that the negative relationship between TPAL and restatements is more pronounced when firms are subject to greater litigation risk and when firms are audited by non-specialist auditors. Overall, we show that TPAL has important implications for client firms' financial restatements.     

Can compulsory liability insurance reduce agency costs? Evidence from China

This paper discusses the impact mechanism of compulsory liability insurance on agency costs. Studying the companies listed in China’s food manufacturing industries in 2011–2018, we find that compulsory liability insurance significantly reduces the two types of agency costs, namely, alleviating the principal-agent problem and the principal–principal problem. Robustness tests confirm this finding. The reduction of information asymmetry and the improvement of internal control quality are the mechanisms leading to this result. Compulsory food safety liability insurance plays a significant role in reducing agency costs when company ownership is concentrated or when media coverage is high. This paper provides empirical evidence for joint regulation by the public and private sectors, also provides theoretical reference for further optimizing food safety governance mode.     

人机共驾事故侵权责任与保险制度的法经济分析

作为人工智能落地的重点领域，自动驾驶技术未来将大幅减少交通事故，降低保险赔付。但自动驾驶汽车难以快速跨越人机共驾阶段，实现完全无人驾驶。机动车事故侵权损害赔偿与保险赔付具有显著协同效应，人机共驾汽车事故的侵权责任分配影响着未来交通事故的保险应对，而互动良好的事故保险可以强化侵权法效力，降低人机共驾汽车事故侵权责任不确定性。法经济分析具有独特的责任和风险视角，把人机共驾汽车事故成本细化为直接成本、风险分散成本和风险管理成本，为实现驾驶人、生产人和保险人之间的利益均衡提供工具借鉴。针对人机共驾汽车事故，应该以事故成本为目标调整归责原则、以过错为界限定位侵权法与交强险的功能，并利用无过错保险调整交强险。     

董事高管责任保险与权益资本成本——基于信息披露质量与高管风险偏好渠道

基于2007—2020年沪深A股上市公司数据，实证探究了公司购买董事高管责任保险的行为与其权益资本成本之间的关系。主检验相关结果显示，公司的权益资本成本将随着公司购买董责险行为的发生而降低。使用PSM和IV估计进行稳健性检验，排除样本选择性偏误等内生性问题的影响后结论依然成立。通过中介效应分析了董责险影响权益资本成本的作用路径，证实了信息披露质量是董责险影响权益资本成本的一种途径。异质性分析结果表明，严监管环境更有利于董责险“外部监管者”职能的发挥。     

Director and officer liability and corporate tax avoidance

We use the unique nature of the director and officer liability protection law applicable to Nevada incorporated firms to study how liability protection is related to corporate tax avoidance. We find that firms incorporated in Nevada avoid 32% more federal corporate tax as a fraction of total assets than firms incorporated in Delaware, and 40% more than firms incorporated in other states. Nevada-incorporated firms have a 15% lower cash effective tax rate and an 8% lower GAAP ETR. The results are robust to various specifications including instrumental variable and matching approaches. Greater tax avoidance is also associated with lower payouts to shareholders for Nevada-incorporated firms. The findings are consistent with theories about the complementarity of managerial diversion and tax avoidance for firms with poor monitoring, and they demonstrate how increases in liability protection lead to the unintended consequence of greater firm tax avoidance.     

The impact of D&O insurance on excess corporate leverage

The governance effects of directors’ and officers’ liability insurance (D&O insurance), an important tool for risk diversification, are of strong concern in the capital market. Using a sample of Chinese A-share listed firms from 2009 to 2018, we examine the impact of D&O insurance on excess corporate leverage. We find that D&O insurance is negatively associated with excess corporate leverage and that this result is consistent with a series of robustness tests. Further analyses show that D&O insurance impedes excess corporate leverage mainly because of its effect on external monitoring. The effect is more pronounced for firms that are state-owned, have political connections and are located in provinces with low marketization than for other firms.     

Repayment performance of joint-liability microcredits: Metropolitan evidence on social capital and group names

This study empirically tests the predictions of four primary theories applicable to joint-liability microcredit programs’ repayment performance using an administrative data in a metropolitan setting. We introduce a new variable, group names, as a proxy for social capital to capture cooperation, solidarity, and drive for success, which shows a significant positive impact of 9.9% on repayment performance. Precise calculations of residential distance between group members show a deterioration of repayment performance by 1.1% with a 15-min increase in minimum walking distance. The results also show that joint liability, sectoral diversification, type of sector that the borrowers facilitate, the ratio of new members in a group, characteristics of loan officers, loan amount, interest rate, income-loan amount coverage ratio, the existence of senior members, average education, and diversity in income streams significantly affect repayment performance.