search query: @indexterm Initial Public Offerings / total: 176
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| Author: | Chalmers, J.M.R. Dann, L.Y. Harford, J. |
| Title: | Managerial opportunism? Evidence from directors' and officers' insurance purchases |
| Journal: | Journal of Finance
2002 : APR, VOL. 57:2, p. 609-636 |
| Index terms: | Executives Insurance Initial public offerings Disclosure Risk management Share prices USA |
| Language: | eng |
| Abstract: | This paper analyzes a sample of 72 IPO firms that went public btw. 1992 and 1996. If managers of Initial public offerings (IPO) firms are exploiting superiour inside information, it is hypothesized that the amount of insurance coverage chosen will be related to the post-offering performance of the issuing firm's shares. Consistent with the hypothesis, the study finds significant negative relation btw. the 3-year post-IPO stock price performance and the insurance coverage purchased in conjunction with the IPO. One plausible interpretation is that, like insider securities transactions, Directors & officers (D&O) insurance decisions reveal opportunistic behaviour by managers. This provides some motivation to argue that disclosure of the details of D&O insurance decisions, as is required in some countries, is valuable. |
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