Family ownership and corporate social responsibility disclosure

ABSTRACT

This study investigates the association between family ownership and the level of CSR disclosure, and to what extent country-level institutional differences and level of industry risk differences influence this association. Using a sample of firms domiciled across 14 European countries for the period from 2010 to 2017, the empirical results show that there is a negative association between family ownership and CSR disclosure. The study also indicates that both institutional environments and the industry risk have influence on the association between family ownership and CSR disclosure. In particular, family-owned firms domiciled in coordinated market economies demonstrate a higher degree of CSR disclosure in comparison to their counterparts operating in liberal market economies. Further, the results show various levels of associations between family ownership and CSR disclosure, as well as social and environmental disclosures, for family-owned firms domiciled in the sub-categories of CMEs. In terms of industry risk, family-owned firms operating in high-risk industries have higher scores of CSR compared to firms in low-risk industries. Moreover, family-owned firms that operate in high-risk industries have higher scores of environmental disclosure, compared to social disclosure, in order to increase their legitimacy on environmental issues.

KEYWORDS:

• Corporate social responsibility disclosure
• family ownership
• institutional environment
• industry risk
• corporate governance

JEL classification:

• G3
• G32
• M14
• M41

Disclosure statement

No potential conflict of interest was reported by the author.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1. Deegan (2000, p. 253) states that ‘legitimacy theory assumes that organisations continually seek to ensure that they operate within the bounds and norms of their respective societies; that is, they attempt to ensure that their activities are perceived by outside parties as being legitimate’.

2. The key advantage of ASSET4 indicators is that they are objective and extensively based on publicly available sources, while other CSR databases including KLD provide highly subjective elements (Ziegler et al., 2009). Cheng et al. (2014) report that the estimated aggregated assets that are invested under management using the ASSET4 data exceed €2.5 trillion, including prominent investment houses such as BlackRock.

3. Social pillar covers the following categories: Employment Quality, Health and Safety, Training and Development, Diversity, Human Rights, Community, Product Responsibility; whereas environmental pillar includes Resource Reduction, Emission Reduction, Product Innovation.

4. Jackson and Apostolakou (2010) use the industry classification introduced by FTSE4Good to classify sectors according to the ecological footprint of their activities.