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<p>Green technology innovation (GTI) has emerged as a critical instrument for balancing economic growth and environmental protection. While governments enforce environmental regulations to stimulate corporate GTI, enterprises encounter high levels of uncertainties and substantial risks that hinder innovation adoption. Directors' and officers' liability insurance (D&amp;O insurance), as an advanced risk-mitigation mechanism, has been employed to bridge this gap. However, existing research predominantly isolates their effects, neglecting synergistic governance dynamics. This study constructs an integrative 'institutions-governance-innovation' framework to investigate how D&amp;O insurance moderates the relationship between environmental regulation and GTI. By applying fixed-effects models on Chinese A-share listed manufacturing firms from 2012 to 2020, we reveal dual mechanisms and interaction effects among these governance instruments, with robustness checks and heterogeneity analyses across patent types, ownership structures, and regional characteristics. The empirical findings yield four key insights: (1) formal regulation demonstrates a U-shaped relationship with GTI. Conversely, informal regulation shows an inverted U-shaped pattern with GTI; (2) a longer D&amp;O insurance coverage correlates positively with green innovation outputs, suggesting cumulative risk mitigation; (3) D&amp;O insurance has a positive moderating effect on the U-shaped curve of formal regulation and the inverted U-shaped curve of informal regulation; and (4) D&amp;O insurance particularly strengthens the relationship between regulation and innovation for green invention patents, indicating its role in mitigating risks associated with radical technological breakthroughs. Our findings establish a synergistic governance framework by clarifying the interplay between D&amp;O insurance and environmental regulation. This offers practical insights for corporate strategy and environmental policy to foster sustainable innovation and balanced development.</p>

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Insuring the green transition: the impact of D&O liability insurance on corporate green innovation

  • 期刊论文

  • 发表日期：

    2026年3月19日

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  • Ying Qiu,
  • Shujun Jin,
  • Di Yao,
  • Lei Cheng

摘要

Green technology innovation (GTI) has emerged as a critical instrument for balancing economic growth and environmental protection. While governments enforce environmental regulations to stimulate corporate GTI, enterprises encounter high levels of uncertainties and substantial risks that hinder innovation adoption. Directors' and officers' liability insurance (D&O insurance), as an advanced risk-mitigation mechanism, has been employed to bridge this gap. However, existing research predominantly isolates their effects, neglecting synergistic governance dynamics. This study constructs an integrative 'institutions-governance-innovation' framework to investigate how D&O insurance moderates the relationship between environmental regulation and GTI. By applying fixed-effects models on Chinese A-share listed manufacturing firms from 2012 to 2020, we reveal dual mechanisms and interaction effects among these governance instruments, with robustness checks and heterogeneity analyses across patent types, ownership structures, and regional characteristics. The empirical findings yield four key insights: (1) formal regulation demonstrates a U-shaped relationship with GTI. Conversely, informal regulation shows an inverted U-shaped pattern with GTI; (2) a longer D&O insurance coverage correlates positively with green innovation outputs, suggesting cumulative risk mitigation; (3) D&O insurance has a positive moderating effect on the U-shaped curve of formal regulation and the inverted U-shaped curve of informal regulation; and (4) D&O insurance particularly strengthens the relationship between regulation and innovation for green invention patents, indicating its role in mitigating risks associated with radical technological breakthroughs. Our findings establish a synergistic governance framework by clarifying the interplay between D&O insurance and environmental regulation. This offers practical insights for corporate strategy and environmental policy to foster sustainable innovation and balanced development.