Determinants of Market Reactions to the Disclosure of Directors and Officers Insurance Purchases - Evidence from Taiwan

Abstract

This paper examines the market reaction to a sample of 623 directors’ and officers’ insurance first purchase announced from 2002- 2010 in Taiwan. This paper documents an average abnormal return of about -0.870 percent over a 2-day announcement window. Instead viewing such insurance necessary to attract and maintain competent directors and officers, shareholders view such insurance to have adverse effects on their wealth.