The Impact of Family Control on Corporate Climate Performance: Evidence from Chinese Listed Firms
DOI:
https://doi.org/10.63385/jemm.v2i1.51Keywords:
Family Control, Climate Performance, Ownership-Control SeparationAbstract
This paper explores the relationship between family ownership and corporate climate-related disclosure. These empirical findings show that family control is positively associated with higher levels of climate performance, using panel data of 9762 firm-year observations from 2010 to 2022, where climate performance is measured by the Bloomberg Environmental Disclosure Score. A quantitative research design is employed, combining fixed-effects regression models with robustness checks including lagged dependent variables and propensity score matching. This suggests that family firms, due to their long-term orientation and concern for reputation and legacy, may be more inclined to engage in environmentally responsible practices. However, the study also finds that when there is a greater separation between ownership and control—such as through complex ownership structures—the positive effect of family control on climate performance diminishes. In these cases, the misalignment between cash flow rights and control rights may lead family owners to prioritize personal benefits over climate-related commitments. To understand the underlying mechanisms, this study constructs a managerial short-termism index using machine learning-based text analysis. These results indicate that family-controlled firms typically exhibit lower levels of managerial short-termism, which helps explain their stronger climate performance. In contrast, higher separation between ownership and control correlates with increased short-termism, negatively affecting environmental outcomes. This study contributes to the literature by offering new theoretical insights and empirical evidence on how family governance influences climate performance. It also provides practical implications for improving climate-related disclosure in firms with family involvement, especially by addressing the risks posed by control-ownership divergence.
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