Directors' and officers' liability insurance and loan spreads

  title={Directors' and officers' liability insurance and loan spreads},
  author={Chen Lin and M. S. Officer and R. Wang and H. Zou},
  journal={Journal of Financial Economics},
  • Chen Lin, M. S. Officer, +1 author H. Zou
  • Published 2013
  • Business
  • Journal of Financial Economics
  • We analyze the effect of directors' and officers' liability insurance (D&O insurance) on the spreads charged on bank loans. We find that higher levels of D&O insurance coverage are associated with higher loan spreads and that this relation depends on loan characteristics in economically sensible ways and is attenuated by monitoring mechanisms. This association between loan spreads and D&O insurance coverage is robust to controlling for endogeneity (because both could be related to firm risk… CONTINUE READING
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