Corporate governance and financial performance of Indian public sector insurance companies: Does corporate social responsibility matter?

Purpose The main purpose of this study is to investigate the impact of corporate governance on the financial performance of public sector insurance companies in India, as well as the moderating effect of Corporate Social Responsibility (CSR). Design/methodology/approach The study uses an ex-post facto research design with purposive sampling methods to collect secondary data from annual reports of public sector insurance companies in India over the period of 10 years, from 2013–14 to 2022–23. Corporate governance is considered as an independent variable, Return on Equity as a dependent variable, firm size and age as control variable and CSR as a moderator. Generalized Least Square (GLS), Fixed-effects robust regression models are used for statistical analysis with the help of SPSS and STATA software. Findings The study reveals that most corporate governance attributes exhibit a positive but statistically insignificant relationship with financial performance (ROE), except for CEO duality. Moderating variable CSR and its interaction with CEO duality have a significant impact on financial performance. However, equity holders’ returns are also contingent upon the scale or size of the public insurer's business. Practical implications The study advocates that policymakers and regulators should design ethical governance mechanisms that give equal priority to social responsibility and sustainability practices. Emphasizing a unified leadership structure with a clear sustainability vision can enhance governance effectiveness and improve the financial performance of insurers, which operate under stringent regulatory oversight. Originality/value The study provides empirical evidence of CSR contribution in synergizing the relationship between corporate governance mechanisms and the financial performance of the Indian Insurance industry.