Volume 31, Number 2, 2026

The Impact of ESG Performance on Solvency Risk: The Moderating Roles of Female Directors and External Assurance

Chen-Ying Lee
Department of Risk Management and Insurance, Shih Chien University, Taiwan, R.O.C
bean44019@gmail.com

ABSTRACT

This study examines the relationship between environmental, social, and governance (ESG) performance and solvency risk in Taiwanese financial and insurance firms, focusing on the moderating roles of female board representation and external assurance. Using an unbalanced panel of 52 firms from 2015 to 2022, we employ pooled OLS regressions with year fixed effects and firm-clustered standard errors. The results show that the relationship between ESG performance and solvency risk varies across ESG dimensions and measures of financial stability. Environmental and social performance exhibit heterogeneous associations with solvency risk. Female board representation and external assurance significantly moderate the ESG–solvency relationship in selected specifications, indicating that governance characteristics and disclosure credibility condition the financial implications of ESG performance. These findings contribute to the sustainable finance literature by highlighting the contingent relationship between ESG performance, governance mechanisms, and financial stability in financial and insurance firms.

JEL Classifications: G21, G2, G34, M14

Keywords: ESG performance, solvency risk, female director, external assurance

Cite this article: 

Lee, C.-Y., 2026, “The Impact of ESG Performance on Solvency Risk: The Moderating Roles of Female Directors and External Assurance,” International Journal of Business, 31(2), 005. https://doi.org/10.55802/IJB.031(2).005