Managerial legal liability coverage and earnings conservatism

被引：151

作者：

Chung, Hyeesoo H. ^{[2
]}

Wynn, Jinyoung R. ^{[1
]}

机构：

[1] Louisiana Tech Univ, Sch Accountancy, Ruston, LA 71272 USA

[2] Arizona State Univ W, Sch Global Management & Leadership, Phoenix, AZ 85069 USA

来源：

JOURNAL OF ACCOUNTING & ECONOMICS | 2008年 / 46卷 / 01期

关键词：

legal liability; D&O liability insurance; indemnification; earnings conservatism;

D O I：

10.1016/j.jacceco.2008.03.002

中图分类号：

F8 [财政、金融];

学科分类号：

0202 ;

摘要：

This paper examines the effect of managerial legal liability coverage on earnings conservatism. Using directors' and officers' (D&O) liability insurance coverage and cash for indemnification as a proxy for managerial legal liability coverage, we find that the higher the managerial liability coverage, which reduces the expected legal liability of managers, the less conservative the firm's earnings. We also find that managerial legal liability coverage has a stronger influence on earnings conservatism in a legal regime with higher litigation risk. Our results are consistent with the threat of litigation conditioning managers to practice conservative accounting. (C) 2008 Elsevier B.V. All rights reserved.

引用

页码：135 / 153

页数：19

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