This article models a board of directors consisting of either pure directors or shareholder directors. Different from pure directors, shareholder directors own equity of the firm in addition to receiving directors’ fee. The model reaches a conclusion that if directors owe their appointments to...

The paper presents a model of shareholders' decision to purchase Directors' and Officers' (D&O) insurance for their directors. We consider the tradeoff between the “Governance Enhancing Effect” and the moral hazard effect of D&O insurance and focus on the role of information in determining...