Can Directors and Officers Liability Insurance Mitigate Corporate ESG Decoupling? Evidence from China A-Share Listed Companies

Ziang Han

doi:10.54254/2754-1169/2025.GL29195

Advances in Economics, Management and Political SciencesOpen access

Can Directors and Officers Liability Insurance Mitigate Corporate ESG Decoupling? Evidence from China A-Share Listed Companies

Research Article

Open Access

Can Directors and Officers Liability Insurance Mitigate Corporate ESG Decoupling? Evidence from China A-Share Listed Companies

Ziang Han ^1*

¹ Central University of Finance and Economics

^*Corresponding author: maxvers33@126.com

Published on 5 November 2025

AEMPS Vol.236

ISSN (Print): 2754-1177

ISSN (Online): 2754-1169

ISBN (Print): 978-1-80590-505-9

ISBN (Online): 978-1-80590-506-6

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Abstract

As ESG (Environmental, Social, and Governance) issues draw increasing attention, Directors and Officers (D&O) liability insurance has emerged as a critical tool in corporate risk management, playing a positive role in enhancing corporate governance and reducing operational risks. Against this backdrop, preventing ESG decoupling is essential for achieving sustainable and high-quality development. Based on data from A-share listed companies between 2007 and 2023, this study investigates the impact of D&O insurance on corporate ESG decoupling. The empirical results indicate that D&O insurance significantly mitigates ESG decoupling, with the effect being statistically significant at the 1% level. Specifically, D&O insurance alleviates ESG decoupling primarily by easing firms’ financing constraints, curbing managerial short-termism, and increasing R&D investment. These findings provide robust empirical evidence for the role of D&O insurance in promoting sound and high-quality corporate development and offer valuable insights for policy formulation and corporate management practices.

Keywords:

ESG decoupling, Directors and officers liability insurance, managerial short-termism, external monitoring

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References

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References

[1]. Marquis C, Qian C. Corporate social responsibility reporting in China: Symbol or substance? [J]. Organization science, 2014, 25(1): 127-148.

[3]. Core J E. The directors' and officers' insurance premium: An outside assessment of the quality of corporate governance [J]. Journal of Law, Economics, and Organization, 2000, 16(2): 449-477.

[4]. Chalmers J M R, Dann L Y, Harford J. Managerial opportunism? Evidence from directors' and officers' insurance purchases [J]. The Journal of Finance, 2002, 57(2): 609-636.

[5]. Boyer M M, Stern L H. D&O insurance and IPO performance: What can we learn from insurers? [J]. Journal of Financial Intermediation, 2014, 23(4): 504-540.

[6]. Zeng, B., Fang, R., & Huang, J. (2023). A review of research on directors and officers liability insurance: controversies and consensus. Insurance Theory and Practice, (11), 80-105. (in Chinese)

[8]. Hu, G., & Hu, J. (2017). Directors and officers liability insurance and corporate risk-taking: Theoretical path and empirical evidence. Accounting Research, (05), 40-46+96. (in Chinese)

[9]. Liu, Y., Yu, Z., & Zhang, F. (2023). D&O insurance, executive risk preferences, and corporate sustained innovation capability. Accounting Friends, (12), 62-70. (in Chinese)

Cite this article

Han,Z. (2025). Can Directors and Officers Liability Insurance Mitigate Corporate ESG Decoupling? Evidence from China A-Share Listed Companies. Advances in Economics, Management and Political Sciences,236,34-43.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

About volume

Volume title: Proceedings of ICFTBA 2025 Symposium: Financial Framework's Role in Economics and Management of Human-Centered Development

ISBN: 978-1-80590-505-9(Print) / 978-1-80590-506-6(Online)

Editor: Lukáš Vartiak, Habil. Florian Marcel Nuţă

Conference website: https://2025.icftba.org/Galati.html

Conference date: 17 October 2025

Series: Advances in Economics, Management and Political Sciences

Volume number: Vol.236

ISSN: 2754-1169(Print) / 2754-1177(Online)

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