Beyond profit maximization: The effect of cooperative governance on insolvency risk in the Brazilian supplementary healthcare industry

Abstract Traditional bankruptcy literature has primarily focused on commercial enterprises, often overlooking the unique dynamics of cooperatives and other small organizations. This study addresses this g ap by developing a predictive model for insolvency risk within Brazil's supplementary health sector, encompassing both for‐profit and not‐for‐profit healthcare insurers, with a newly curated dataset comprising a total of 684 Brazilian private healthcare medic plan operators in a 10‐year span, from 2014 to 2023. For the first time, the financial resilience of cooperatives is quantified, demonstrating that these entities exhibit a significantly lower insolvency risk compared to other organizational forms. This finding is further supported through a propensity score matching analysis. In addition, total debt and administrative expenses were also identified as significant determinants of insolvency risk. From a methodological standpoint, the use of a generalized additive model made it possible to address the limitations of generalized linear models, enabling the incorporation of the non‐linear relationships between financial and governance variables on the risk of insolvency.