The Impact of ESG Performance on the Value of Family Firms: The Moderating Role of Financial Constraints and Agency Problems

Christian Espinosa-Méndez (), Carlos P. Maquieira and José T. Arias
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Christian Espinosa-Méndez: Departamento de Administración, Facultad de Administración y Economía, Universidad de Santiago de Chile, Santiago 835070, Chile
Carlos P. Maquieira: CENTRUM, Católica Graduate Business School, Pontificia Universidad Católica de Perú, Lima 15023, Peru
José T. Arias: Business School, Universidad Católica de la Santísima Concepción, Concepción 4090541, Chile

Sustainability, 2023, vol. 15, issue 7, 1-20

Abstract: The main objective of this research is to shed more light on how ESG may be seen as a valuable investment for family firms. We study the impact of ESG performance on the value of family firms by considering the moderating role played by financial constraints and agency costs. Using an international sample of 254 firms that belong to the 500 largest family-owned firms worldwide over the period 2015–2021, we report that the overall ESG score is positively associated with firm value. Among the three ESG components, we find that environmental and social performances have a positive and statistically significant impact on firm value. However, we find no evidence of any significant effect of governance score on firm value. More importantly, we also find that the impact of ESG performance on firm value is lower under the presence of financial constraints and agency costs.

Keywords: ESG performance; family firms; financial constraints; agency problems (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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