RT journal article
T1 ESG controversies and insolvency risk: evidence from the insurance industry
A1 Giráldez Puig, Pilar
A1 Moreno, Ignacio
A1 Pérez Calero, Leticia
A1 Guerrero Villegas, Jaime
A2 Organización de Empresas
K1 ESG controversies
K1 Insolvency risk
K1 Financial risk
K1 Insurance sector
K1 ESG practices
K1 Corporate governance
AB Purpose – This study investigates the relationships between environmental, social, and governance (ESG) controversies and insolvency risk in the insurance sector. Drawing from legitimacy and stakeholder theories, the authors explore the impact of ESG controversies on insurers’ insolvency risk and the moderating effect of ESG practices on this relationship. Design/methodology/approach – This study utilises a dataset comprising 120 stock insurance firms spanning from 2011 to 2022. The authors employed system-GMM estimations to control for potential endogeneity and conducted several robustness checks.Findings – ESG controversy positively influences insurers’ insolvency risk, with ESG practices mitigating these positive effects. The Governance (G) component of ESG practices plays a key role in counteracting the effects of ESG controversies on insurance companies’ insolvency risk.Originality/value – This is the first study to investigate the direct relationship between ESG controversies and insolvency risk in the insurance industry. It underscores the critical influence of stakeholders’ perceptions of the company’s legitimacy, which is determined by the number of ESG controversies undertaken by the insurer company, on its insolvency risk. Additionally, by examining the three components of ESG practices individually, the authors offer insights into how managers can gain a competitive edge, particularly by utilising governance practices as safeguards against the adverse effects of ESG controversies on their financial risk.
PB Emerald
SN 0025-1747
YR 2024
FD 2024-07
LK http://hdl.handle.net/10498/34169
UL http://hdl.handle.net/10498/34169
LA eng
DS Repositorio Institucional de la Universidad de Cádiz
RD 09-nov-2026