ESG performance and bankruptcy risk in the hospitality and tourism industry: Moderating role of the Covid-19 pandemic and corporate governance attributes

This research examines the relationship between environmental, social, and governance (ESG) performance and bankruptcy risk for hospitality and tourism (HT) firms, in comparison to other industry sectors. It further examines this proposed relationship within the contingencies of the Covid-19 pandemic and four corporate governance attributes. Fixed-effects regression analyses with 21,563 firm-year observations indicate that firm bankruptcy risk decreases as ESG performance improves. However, relative to both non-HT firms in general and firms in other service sectors, HT firms demonstrate a weaker effect of ESG performance on mitigating bankruptcy risk, especially after the Covid-19 outbreak. In addition, smaller boards and a lower proportion of institutional ownership enhance the relationship between ESG and bankruptcy risk, while CEO duality and board gender diversity attenuate this relationship. This study highlights the uniqueness of the HT industry, and its findings suggest corporate governance practices that can strengthen the impact of ESG initiatives.