Director and Executive Liability Insurance and Green Total Factor Productivity

Abstract

Abstract: High quality development requires quality foremost and efficiency first to form a green production mode and to correctly grasp the relationship between environmental protection and economic development. Based on the empirical evidence of A-share listed companies in Shanghai and Shenzhen stock exchanges from 2017 to 2021, this paper conducts a study. The findings show that the directors’ and executives’ liability insurance has significantly reduced green total factor productivity. After the robustness test, the above conclusion is still valid. The negative impact of director and executive liability insurance on green total factor productivity is mainly realized by limiting the green transformation of enterprises, and this negative effect is more significant in situations with higher environmental risks. But if the corporate governance mechanism operates effectively, the negative impact of director and executive liability insurance on green total factor productivity will be suppressed. The extensive testing reveals that the director and executive liability insurance reduces the efficiency of enterprise resource allocation, leading to the extensive production of enterprises and then a decrease in green total factor productivity. The above conclusion indicates that in the absence of effective corporate governance mechanisms and environmental protection systems, the director and executive liability insurance may have adverse effects on the green transformation and high-quality development of enterprises. Therefore, it is necessary to further improve the corporate governance mechanism, strengthen the construction of environmental protection systems, give full play to the government, the public, and insurance companies, and make the management pay more attention to long-term interests, thereby promoting the director and executive liability insurance to generate relatively positive economic consequences.

Key words: director and executive liability insurance, green total factor productivity, high quality development

CLC Number:

F275.5

LI Yuan, ZHAO Yang, QIN Shuai. Director and Executive Liability Insurance and Green Total Factor Productivity[J]. Contemporary Finance & Economics, 2023, 0(6): 145-156.

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