The relationship between family ownership and Corporate Sustainability
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2022-08-22
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en
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This study investigates the relationship between family ownership and Corporate Sustainability Reporting (CSR) decoupling and the moderating role of the board of directors. Sustainability reporting has grown in popularity as a way to hold firms accountable for their impact on the environment and society. However, the voluntary nature of sustainability reports creates opportunities for managers to decouple the reported information from the actual performance. It is hypothesized that family ownership has a negative relationship with CSR decoupling and that board strength negatively moderates this relationship. Using a multilevel panel data set including 2196 firms covering the period 2016-2020, the results show that family ownership is positively related to CSR decoupling. Board strength moderates the main relationship positively. The results are consistent with the voluntary disclosure theory suggesting that only firms with superior sustainability performance are incentivized to disclose sustainability information to increase their market value. Additionally, the data indicates that most firms engage in a brownwashing strategy through intentional withholding of sustainability information to avoid related costs and to keep competitors uninformed. Based on the findings, policymakers are recommended to further discuss how to decrease the gap between sustainability performance and the disclosed sustainability report, especially within family-owned firms.
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Faculteit der Managementwetenschappen