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The purpose of this paper is to examine the impact of directors’ and officers’ liability insurance (D&O insurance hereafter) on corporate governance and firm performance, with a specific focus on investment efficiency.

Using a sample of Chinese A-share listed firms from the period 2007 to 2020, this study uses Ordinary Least Squares regressions to investigate the research questions, as well as moderating and mediating effects. Additionally, alternative measures of investment efficiency are used, and the Heckman two-stage model and propensity score matching model are used to demonstrate the consistency of the findings and to mitigate the risk of endogeneity.

The findings of this study suggest that purchasing D&O insurance has a detrimental impact on corporate investment efficiency, particularly in the context of over-investment activities; robust internal governance mechanisms, exemplified by a higher shareholding ratio of the top shareholder and enhanced internal control quality, alleviate this negative effect; and financing constraints act as a mediating factor in the association between D&O insurance and investment efficiency.

Corporate investment efficiency is of significant importance for both national macroeconomic growth and micro-enterprise development. Notably, the prevalence of D&O insurance among Chinese firms is progressively increasing, thus exerting a growing influence. This study contributes to the existing literature on D&O insurance and corporate investment efficiency, providing valuable insights into the economic impact of D&O insurance on Chinese firms. The empirical evidence presented herein facilitates future reforms and adjustments.

The determinants that contribute to reducing stock price crash risk have garnered attention from scholars and practitioners. However, our understanding of the relationship between board diversity and stock crash risk, as well as the contextual factors that influence this relationship, remains limited. To address this gap, this study aims to investigate how different attributes of board diversity affect stock price crash risk, particularly under conditions of higher performance hazard and ownership concentration.

Using a two-stage least squares fixed-effects estimator, the authors analyze a panel data set of 1,792 firm-year observations across 282 firms listed on the KOSPI200 from 2010 to 2019.

Relation-oriented diversity reduces future stock price crash risk, particularly when firms experience performance shortfalls and have concentrated ownership structures, but task-oriented diversity has no significant effects. The results imply that only relation-oriented diversity strengthens governance mechanisms by curtailing managerial bad news withholding behaviors, and the role of relation-oriented diversity in reducing stock crash risk becomes more crucial when firms have higher performance hazard and concentrated ownership.

This study makes crucial contributions as follows: the authors contribute to the stock crash risk literature by shifting the focus from how to when board diversity matters in assessing stock crash risk; the authors extend the board diversity research and enhance scholarly understanding of the effects of board diversity on corporate governance by highlighting that not all aspects of board diversity improve firm governance mechanisms; and the authors widen the lens from a single attribute to multiple attributes of diversity to reveal the effects of diversity on boards in assessing future crash risk.

The ability of generative artificial intelligence (AI) tools such as ChatGPT to produce convincing, human-like text has major implications for the future of corporate reporting, including sustainability reporting. As the importance of sustainability reporting continues to grow, this study aims to critically analyse the benefits and pitfalls of automated text generation and processing.

This study develops a conceptual framework to delineate the field, assess the implications and form the basis for the generation of research questions. This study uses Alvesson and Deetz’s critical framework, considering insight (a review of literature and practice in the field), critique (consideration of the influences on the production and use of non-financial information and the implications for assurers of such information) and transformative redefinition (considering the implications of generative AI for sustainability reporting and proposing a research agenda).

This study highlights the implications of generative AI for sustainability accounting, reporting, assurance and report usage, including the risk of AI facilitating greenwashing, and the importance of more research on the use of AI for these matters.

The paper highlights to stakeholders the implications of AI for all aspects of sustainability reporting, including accounting, reporting, assurance and usage of reports.

The implications of AI need to be understood in society, which this paper facilitates.

This study critically analyses the potential use of AI for sustainability reporting, construct a conceptual framework to delineate the field and develop a research agenda.

Utilizing the expectation states theory in sociology, this study probes into the influence of the board's informal hierarchy on the quality of enterprise innovation, originating from the perspective of internal directorial interactions, while analyzing the boundary effects exhibited by the nature of property rights and the intensity of geo-culture.

The study selects China's A-share listed companies from 2008 to 2021 as the research sample, employing the Tobit regression analysis method to scrutinize the hypotheses presented in the text.

The regression results demonstrate a positive correlation between the board's informal hierarchy and the enterprise innovation quality (EIQ). Upon introducing variables specific to property rights and geographical culture, the authors found that in comparison to non-state-owned enterprises (non-SOEs), the influence of the board's informal hierarchy on the quality of corporate innovation is diminished in SOEs. Conversely, the intensity of geo-culture across Chinese provinces enhances their mutual positive influence. In the additional analysis, the authors also found that the elevation of corporate risk tolerance is a significant pathway for the positive effect of the board's informal hierarchy on EIQ. Moreover, this positive influence is more profound in high-tech enterprises, businesses implementing equity incentive plans and companies that have subscribed to director and officer liability insurance.

The findings not only deepen the understanding of how the board's internal status characteristics influence corporate decision-making but also enrich the application scope of expectation states theory. Furthermore, this study offers valuable guidance for optimizing innovation decision-making by adjusting the personnel structures of corporate boards.

The Malaysian Anti-Corruption Commission Act 2009 (MACC Act) has introduced Section 17 A, which holds companies and their management accountable for bribery committed by their Associated Persons in the interest of the company. This study aims to explore the evolving concept of Associated Persons and corporate liability within this legal framework. It delves into three primary legal models of Associated Persons, particularly focusing on corrupt cases falling under Sections 17 A (1), 17 A (6) and 17 A (7) of the MACC Act. The study also investigates the extent of Associated Persons’ involvement in these cases that eventually led to company liability.

The study deployed thematic and comparative analyses to assess the legal framework and highlight the significance of Section 17 A of the MACC Act.

The study disclosed that, despite having corruption policies, there is still a possibility for Associated Persons to engage in corrupt activities. To ensure long-term business sustainability, it is crucial to implement effective mechanisms and a strong compliance culture.

This study suggests implementing a due diligence checklist and conducting risk assessments for companies as measures against corruption caused by Associated Persons. Corporate entities and legal professionals may benefit from the reported findings to better comprehend the corruption offences outlined in Section 17 A of the MACC Act.

This study empirically investigates the impact of directors' and officers' liability insurance on corporate environmental investment.

This paper takes A-share listed firms in the most polluting industries from 2013 to 2019 as the research sample. The authors perform multiple regression analysis to examine the research question, and other approaches such as PSM and Heckman two-stage model are applied to test the robustness of the main results.

The authors find that D&O insurance insured firms significantly decrease the level of corporate environmental investment. The results keep consistent after alleviating potential endogenous concerns. Further analysis shows that the negative association between D&O insurance and environmental investment is more pronounced in firms facing greater environmental pressure and stronger market supervision, and firms located in regions with a rich legal environment.

This research extends the literature on the antecedents of corporate environmental investment and the consequences of D&O insurance.

The study may deepen people's understanding of D&O insurance and inform them of its negative effects. This research sheds light on the potential factor resulting in a relatively low level of corporate environmental investment in China, which has an important policy implication for government to carry out some regulations to make a difference.

Against the backdrop that more importance has been attached to environmental protection globally, this paper is the first study to examine the impact of D&O insurance on corporate environmental investment in the context of the transitional and emerging market-China.

This study aims to develop a comprehensive insolvency model tailored to Islamic banks, ensuring alignment with Shariah principles throughout pre-insolvency, bankruptcy and post-bankruptcy stages.

The research adopts a qualitative research method, using a desktop research approach. Primary sources and secondary sources are examined to gather information and draw conclusions.

This study presents a comprehensive insolvency model designed for Islamic banks, rooted in Shariah principles. The model covers pre-insolvency, bankruptcy (taflis) and post-bankruptcy stages, incorporating key Shariah parameters to ensure adherence to Islamic finance principles. It addresses challenges such as adapting to dynamic financial landscapes and varying interpretations of Shariah principles. Notably, the model recognizes the separate legal personality of Islamic banks and emphasizes transparency, fairness and compliance with religious obligations. In the post-bankruptcy stage, directors are urged to voluntarily settle remaining debts, aligning with ethical and Shariah-compliant standards.

The study contributes to the stability and growth of Shariah-compliant financial systems by extending insolvency principles to Islamic banks, providing a foundation for future research and policymaking specific to this context.

This paper aims to investigate the determinants and consequences of using disclaimer language in the banks’ audit committee (AC) reports. This study aims to analyze the factors tempting AC members of banks to disclose disclaimer language in the AC reports and the effect of such language on the cost of equity.

The data cover the period from 2006 to 2015 and considers the top US bank holding companies. Voluntary disclosure in the AC report is manually coded by using a scoring grid. Multivariate regression analysis is mainly used in the study.

The findings suggest that the ACs are using the disclaimer language to protect themselves when disclosing a high level of voluntary information that describes their oversight activities or to reduce their liability exposure due to lower financial reporting quality. The findings also reveal that investors are requiring a higher return on their investments whenever ACs use disclaimer language in their reports.

The AC report provides useful information to shareholders who evaluate the AC’s performance and accordingly vote for or against AC members on annual basis. The paper sheds lights on the motives and consequences of disclaimer language in the ACs report. Thus, the study benefits shareholders by providing empirical evidence in regard to the usage of disclaimer language. Also, the findings benefit industry, corporate governance organizations, standard setters and regulators that analyze AC disclosures and issue recommendations or new standards for improving those disclosures.

This study aims to analyze the impact of corporate governance on firms’ external financing decisions in the Middle East and North Africa (MENA) region.

The authors analyzed a unique set of panel data comprising 2,425 nonfinancial firms whose shares are traded on stock exchanges in countries in the MENA region. The authors fitted an ordinary least squares model to estimate the regression coefficients. The authors performed a sensitivity analysis using alternative measures of the critical variables and an endogeneity analysis using instrumental variable methods with plausible external instruments.

The results revealed that corporate governance characteristics of firms are strongly associated with their degree of leverage. They also showed that macrofinancial conditions, financial regulations, corporate governance enforcement and social conditions mitigate the impact of corporate governance on firms’ financing decisions.

A larger sample size will further improve the results; however, this is difficult and depends on the extent to which increasing disclosure practices allow more corporate information to reach international databases.

This study provides new evidence on the role of corporate governance on firms’ financing decisions and documents the essential mitigating role of institutions, alerting managers to consider them.

This study is a novel attempt. Based on information from different data sources, this study explored the predictive power of corporate governance, ownership structures and other firm-specific characteristics in explaining corporate leverage in MENA countries. Overall, the analysis provides new evidence of the association between corporate governance and capital structure in the MENA region, highlighting the critical role of institutions.

The study examines the effects of corporate governance and countrywide institutions and risk factors on corporate liquidity.

Using firm-level data, the authors analyze the effect of corporate governance and various economic, regulatory and social institutions on the liquidity of firms operating in the Middle East and North Africa (MENA) region. The authors use fixed-effects, firm-specific and country-level controls, disaggregated analysis, sensitivity and endogeneity analysis to test the robustness of the estimates.

The corporate governance characteristics of firms influence in diverse ways their liquidity decisions. The independence and diversity of the board and institutional ownership are especially strong predictors. The effect also depends on the size of the firm and the degree of economic development and exhibits time sensitivity and nonlinearity. Enforcement institutions and risk factors play a strong role.

The analysis contributes to the literature by using a large sample of countries and firms over a larger period, distinguishing between poorer and richer countries and using sensitivity and endogeneity analysis. The analysis considers explicitly the role of regulatory and enforcement conditions, social structures and religious beliefs.