​Research on the Impact of D&O Insurance on Corporate ESG Performance

Research on the Impact of D&O Insurance on Corporate ESG Performance

Wang Junwei¹ Wang Qihui¹ Wang Yingyan²

(1.School of Accountancy, Shandong University of Finance and Economics, Shandong Jinan,250014,China:

2. The People's Govemment of Xinzhuang Town, Zhaoyuan City, Shandong Province, Shandong Zhaoyuan,265401,China)

Abstract: As the ESG concept gains widespread acceptance, how to enhance corporate ESGperformance has become a focus of public attention. As an important risk control tool for enterprises,Directors' and Officers' Liability Insurance (D&O insurance) may have a favorable governance effecton corporate ESG performance. Using data of A-share listed companies in Shanghai and Shenzhenfrom 2009 to 2022, this study empirically examines the impact of D&O insurance on corporate ESGperformance. The findings are as follows: (1) The purchase of D&O insurance by listed companiessignificantly improves corporate ESG performance; (2) Information asymmetry and agency costs playmediating roles between D&O insurance and corporate ESG performance; (3) Media attention andmanagement shareholding strengthen the promoting effect of D&O insurance on ESG performance; (4)The ESG-enhancing effect of D&O insurance is more pronounced in heavily polluted regions and samples with better legal environments. These conclusions provide important references for improvingthe design of D&O insurance systems and promoting corporate ESG performance.

Keywords: D&O Liability Insurance; Corporate ESG Performance; Information Asymmetry; Agency Costs

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