This study investigates whether and how the Liability Limitation Provision (hereafter LLP) protects corporate directors from risky managerial decisions. This study is motivated by the increasing number of LLP adopting companies since 2012, despite of the market-wide controversy on LLP. The popular adoption of LLP suggests that the adoption of LLP has its expected benefit greater than its expected cost. Evidently, the purpose of LLP is to encourage corporate managers to fully exercise their discretion with good will. The LLP is voluntarily adopted in each company upon shareholders’ agreements adding the LLP article to the articles of incorporation. This paper first examines whether the adoption of LLP reduces inefficient corporate investment behavior by promoting managers to make more optimal investment decisions. Further exploring the impact of LLP, this paper examines how the firm value is affected after the adoption of LLP. As public voices against the LLP has criticized potential side effect of the provision, I have conducted an additional analysis on whether the adoption of LLP increases information asymmetry by examining for association with related-party transaction. This indicates LLP is available to companies with high likelihood of managerial opportunistic behavior. This study finds that the LLP is positively associated with investment, and this association is more evident among under-investment firms. Testing for the association between LLP and firm value, I find no association in general. However, among under-investment firms I have found a positively significant association between LLP and firm value. Additionally, I have found that the adoption of LLP does not have a significant association with related-party transactions. This study contributes to the literature by enhancing understanding on the LLP. First, I provide empirical evidence about how the adoption of LLP affects corporate investment level and firm value. Second, this study contributes to existing literature on corporate investment efficiency by showing that the LLP can control for managerial preference on risk-averse decisions and resolve under-investment issues. Lastly, this study contributes to the academic controversy on the LLP, by providing an argument against the potential side effect of LLP.