Financial statement comparability and directors’ and officers’ insurance coverage

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Abstract

This study examines the effect of financial statement comparability on directors’ and officers’ (D&O) insurance coverage. Using a comprehensive sample of firms listed in the Taiwan capital markets, we find that the more comparable a firm’s financial statements are to its peers’, the less D&O insurance coverage the firm would purchase. The results remain robust after addressing potential concerns related to omitted variables, reverse causality, and sample selection bias. Consistent evidence emerges when we conduct change analyses and employ alternative measures of financial statement comparability. Furthermore, we document that higher comparability reduces abnormal D&O insurance coverage. Taken together, our findings suggest that enhanced financial statement comparability mitigates agency costs, as reflected in lower D&O insurance coverage, thereby benefiting shareholders.

Keywords: D&O Insurance, Financial Statement Comparability, Agency Cost

Authors’ individual contribution: Conceptualization — T.-S.W., F.-Y.L., and L.G.; Methodology — T.-S.W., F.-Y.L. and L.G.; Validation — F.-Y.L. and L.G.; Formal Analysis — T.-S.W. and F.-Y.L.; Data Curation — T.-S.W.; Writing — Original Draft — T.-S.W. and F.-Y.L.; Writing — Review & Editing — T.-S.W. and L.G.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G22, G28, M41, M48

Received: 02.11.2025
Revised: 30.12.2025; 16.01.2026
Accepted: 27.01.2026
Published online: 29.01.2026

How to cite this paper: Wang, T.-S., Lin, F.-Y., & Guan, L. (2026). Financial statement comparability and directors’ and officers’ insurance coverage. Corporate Ownership & Control, 23(1), 29–40. https://doi.org/10.22495/cocv23i1art3