Insurers and lenders as monitors during securities litigation : evidence from D&O insurance premiums, interest rates, and litigation costs

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<title>Insurers and lenders as monitors during securities litigation</title>
<subTitle>: evidence from D&O insurance premiums, interest rates, and litigation costs</subTitle>
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<name type="personal" usage="primary" xmlns:xlink="http://www.w3.org/1999/xlink" xlink:href="MAPA20190013093">
<namePart>Donelson, Dain C.</namePart>
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<namePart>Yust, Christopher G.</namePart>
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<abstract displayLabel="Summary">This study examines whether directors' and officers' insurers and lenders effectively monitor securities litigation and respond through pricing before case outcomes are known. By monitoring, we refer to tracking case progress and obtaining information from the insured (defendant) firm and its counsel prior to case resolution.We find that insurers and lenders increase rates, and that this effect is almost completely isolated to firms with cases that eventually settle. We confirm that this response is reasonable as settled cases are associated with lower future earnings, while there is generally no relation between future earnings and dismissed cases. As direct costs appear low, our results suggest that most costs are indirect in the form of reputational damage. Overall, our results suggest that researchers and policymakers interested in litigation should focus on settled cases, which are the only cases with material long-term costs. </abstract>
<note type="statement of responsibility">Dain C. Donelson, Christopher G. Yust</note>
<subject xmlns:xlink="http://www.w3.org/1999/xlink" xlink:href="MAPA20080633790">
<topic>Seguro de responsabilidad civil patronal</topic>
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<subject xmlns:xlink="http://www.w3.org/1999/xlink" xlink:href="MAPA20080556402">
<topic>Seguro D&O</topic>
</subject>
<subject xmlns:xlink="http://www.w3.org/1999/xlink" xlink:href="MAPA20080547981">
<topic>Litigios</topic>
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<title>The Journal of risk and insurance</title>
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<publisher>Nueva York : The American Risk and Insurance Association, 1964-</publisher>
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<identifier type="issn">0022-4367</identifier>
<identifier type="local">MAP20077000727</identifier>
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<text>02/09/2019 Volumen 86 Número 3 - septiembre 2019 , p. 663-696</text>
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