We hand-collect firm directors' careers with venture capital experiences from the Market Observation Post System (MOPS) of the Taiwan Stock Exchange, matched with those without venture capital experiences, to investigate the relationship between boards’ experiences and risk-taking policy adoption. Firms’ R&D expenditures and financial statistics are from the database of the Taiwan Economic Journal (TEJ). Using a large sample of publicly listed firms in the emerging markets of Taiwan Stock Exchange and Taipei Exchange from 2008 through 2014, this paper finds that the board directors with VC backgrounds boost corporate risk-taking by increasing R&D spending and firm focus, which supports the hypothesis that boards’ VC experiences have positive impacts on firms’ decisions of risky policies.
Moreover, the study examines whether corporate D&O liability insurance in Taiwan boosts corporate risk-taking, taking the board entrepreneurship into consideration. The results suggest that the adoption of corporate D&O liability insurance encourages VC-background directors to increase R&D spending, indicating that the protected directors with VC background are less risk-averse.
Key words: boards’ entrepreneurship; venture capital; R&D investment; firm focus; directors’ and officers’ liability insurance