Ph.D. Arias-Moya, Jose

This research is focused on studying the relationship between ESG performance and default risk of family firms. The sample consists of the 500 largest family firms worldwide (including all continents) for the period 2015–2021. This study shows a positive and a statistically significant relationship between ESG score and Z-score. This is confirmed for ESG environmental and ESG social scores. We include ownership concentration of family members as well as the percentage of family members in the board of directors. In the first case, we detect a non-linear relationship between ownership concentration and Z-score (inverted U shape) and for the second variable we find a negative relationship between the family participation in the board and Z-score. Finally, financial constraints of family firms reduce the impact of ESG score on Z-score.

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.