D&O Insurance and Firms’ Environmental Information Disclosure: Evidence from China

This study analyzes the impact of directors’ and officers’ liability (D&O) insurance on firms’ environmental information disclosure quality. Our findings demonstrate that D&O insurance improves environmental information disclosure quality, which aligns with the governance hypothesis. We ensured the reliability of our results by controlling for endogeneity; our results remained consistent across alternative measures and specifications. This effect is particularly pronounced in state-owned enterprises and firms without prior environmental penalties, financial restatements, or audits conducted by the top 10 accounting firms. This study provides important practical implications, suggesting that purchasing D&O insurance significantly enhances enterprises’ level of environmental governance.