We examine the effect of directors' and officers' liability insurance (D&O insurance) on the behavior of independent directors and the effectiveness of their governance role. Using a unique dataset, we find a negative relation between D&O insurance and personal board meeting attendance by...

We study, for the first time, whether and how directors' and officers' (D&O) insurance affects independent directors' voting. We provide new evidence that D&O insurance through the insurance channel and the insurance-monitoring channel incentivizes independent directors to monitor. The positive...