Family Business, ESG, and Firm Age in the GCC Corporations: Building on the Socioemotional Wealth (SEW) Model

Abstract

This study investigates the relationship between private family control (excluding state and royal) and Environmental, Social, and Governance (ESG) performance among publicly listed firms in the Gulf Cooperation Council (GCC), focusing specifically on the moderating role of firm age. Employing multivariate POLS regression analysis on data from 2016 to 2021 and controlling for established firm-specific variables, we find a robust negative association between private family control and ESG performance, consistent with Socioemotional Wealth (SEW) perspectives where family-centric goals may override broader stakeholder interests. Critically, our results demonstrate that firm age significantly and positively moderates this negative relationship; the detrimental impact of family control on ESG performance attenuates considerably as family firms mature. This attenuation likely reflects the development of sophisticated governance structures, a heightened focus on long-term reputation and SEW preservation, and potential generational shifts towards sustainability values within older firms. Providing the first empirical test of this age moderation effect within the under-researched GCC context, this research extends SEW theory by highlighting the dynamic evolution of family firm sustainability engagement over the lifecycle in a non-Western setting and contributes novel insights to the accounting literature. These findings underscore the need for targeted policies and interventions to foster ESG adoption, particularly among younger private family firms in the GCC, offering valuable insights for regulators, investors, family business owners, and practitioners aiming to foster responsible sustainability practices.

1. Introduction

Over the past two decades, stakeholder demands for non-financial disclosure have escalated significantly, encompassing shareholders, customers, and broader society. This surge is attributed to the limitations of financial statements in predicting financial crises, addressing remuneration scandals, and mitigating uncertainties related to the social and environmental implications of business activities (Thahira & Mita, 2021; Orlitzky et al., 2003).

Environment, Social, and Governance (ESG) considerations now represent the latest evolution in non-financial disclosure, building upon trends in sustainability, corporate social responsibility (CSR), and Integrated Reporting. ESG can be defined as the integration of environmental, social, and governance factors into corporate investment decisions, reflecting responsible, long-term investment practices (Maquieira et al., 2024). The increasing prominence of ESG performance scores among global corporations (Brooks et al., 2019) has driven broader adoption of ESG practices, prompting researchers to investigate the drivers and constraints of ESG reporting.

Numerous studies have explored ESG disclosures and their determinants in developed and developing countries (Balogh et al., 2022; Chung et al., 2023; Helfaya et al., 2023; El Khoury et al., 2023; P. Sharma et al., 2020; Garcia et al., 2017). However, ESG disclosures within GCC markets have received comparatively less scholarly attention. Notably, a growing number of GCC companies are engaging in ESG activities and disclosing their initiatives, responding to global market demands, seeking reputational benefits, and adhering to emerging national and regional regulatory frameworks mandating or encouraging ESG reporting (Yamen et al., 2018; Uyar et al., 2019; Ramadan et al., 2023; KPMG, 2024). While ESG reporting was largely voluntary during our study’s timeframe of 2016–2021, recent regulations mandated it for UAE listed firms in 2022, whereas it remains voluntary, though encouraged, in Saudi Arabia and Kuwait (KPMG, 2024). Existing research on ESG practices and reporting in the GCC region has primarily focused on two areas: the relationship between ESG disclosure and firm performance (Al-Jalahma et al., 2020; Ghardallou & Alessa, 2022; R. B. Sharma et al., 2022; Kibria et al., 2023) and the impact of corporate governance or ownership structure on ESG disclosure scores (Al-Duais et al., 2021; Arayssi et al., 2020; Jizi et al., 2022; Arayssi & Jizi, 2023).

The burgeoning research interest in ESG within the GCC region coincides with a growing focus on family business practices, given their prevalence among listed corporations (Nimer et al., 2020; Ramadan et al., 2023). This context raises the question: Do managerial practices and reporting differ between family and non-family businesses? Several studies have examined the impact of family businesses on managerial practices in GCC companies (Nimer et al., 2020; Maquieira et al., 2024; Wu et al., 2023).

Despite existing research on CSR, sustainability, and ESG practices in GCC family businesses, findings remain inconclusive. For example, Ramadan et al. (2023) found that while GCC family businesses engage in sustainability practices, religious considerations may hinder comprehensive disclosure, particularly where regulatory mandates are less stringent or motivations extend beyond mere compliance. Separately, research focusing on board composition indicates that royal family members on GCC boards may not prioritize ESG reporting, although they positively influence its perceived necessity (Arayssi & Jizi, 2023). Similarly, Alazzani et al. (2021) demonstrated that while analysts in GCC countries incorporate ESG disclosures into recommendations, this positive effect is negatively moderated by the presence of royal family directors. Analysts may perceive ESG efforts in politically connected firms as superficial compliance rather than genuine commitment. This highlights the diverse influences of different ownership and governance structures in the region, distinct from the private family ownership focus of our study. Given the significance of family businesses in the GCC and the increasing adoption of ESG reporting, this study addresses the following:

R1: 

Does the ESG performance differ between family and non-family businesses?

A review of sustainability studies in the GCC reveals a concentration on corporate ownership structures, board characteristics (Alazzani et al., 2021; Arayssi & Jizi, 2023; Arayssi et al., 2020), or explanatory approaches (Ramadan et al., 2023). This study introduces firm age as a potential moderator of the relationship between family businesses and ESG performance. Firm age may either strengthen or weaken this relationship, reflecting theoretical debates on its impact (Hasan & Habib, 2017; Hasan et al., 2015; Lee et al., 2018; Faff et al., 2016). Thus, our second research question is

R2: 

How does firm age moderate the relationship between family businesses and ESG performance?

While general reports indicate a high prevalence of family businesses across the broader GCC economy, including private firms, our study focuses on publicly listed corporations with available ESG data for the period 2016–2021, which represent a specific segment of the market. The observed proportion of family-controlled firms within our sample (15.3%) reflects this focus on listed entities and our specific definition criteria (≥25% ownership by a single family, excluding royal and state holdings). This distinction is important when comparing our sample characteristics to economy-wide statistics.

Therefore, the explicit purpose of this study is twofold: First, to determine if private family control—defined here as excluding royal and state ownership—significantly influences ESG performance within the specific institutional context of GCC listed firms. This addresses a gap in regional ESG research, which often focuses on performance outcomes or governance characteristics, often involving royal families. Second, we aim to investigate the unexplored problem of how firm age interacts with such family control to shape ESG outcomes, testing its potential moderating role. Crucially, we examine these relationships primarily through the lens of the Socioemotional Wealth (SEW) model, recognizing that ESG performance decisions in family businesses may deviate from predictions based solely on traditional theories like signaling, stakeholder, or legitimacy theory. While we acknowledge these other perspectives, the SEW model provides a specific framework to understand the unique drivers in family firms. In doing so, this paper makes a direct contribution by testing the SEW model’s applicability in the GCC and providing novel evidence on the dynamic influence of firm age on how these privately controlled family firms engage with sustainability practices.

This paper proceeds as follows: Section 2 provides the theoretical context and reviews relevant literature to develop our hypotheses. Section 3 outlines the methodology, describing the data sample, research variables, and econometric model specification. The empirical results are presented in Section 4 and discussed in Section 5. Section 6 concludes the paper.

2. Theoretical Background and Hypothesis Development

Academic literature has employed various theoretical frameworks to examine CSR, sustainability, and ESG practices and disclosure, including legitimacy, stakeholder, and institutional theories. Stakeholder theory posits ESG disclosure as a transition from traditional financial disclosure to a communication tool between corporations and their stakeholders (Sawani et al., 2010; Shoaf et al., 2018; Haller et al., 2018). Legitimacy theory, conversely, has been extensively used to explain corporate efforts to mitigate stakeholder pressures (Boiral et al., 2019a, 2019b; Ramadan et al., 2023). Institutional theories, on the other hand, emphasize the influence of formal and informal institutions on the level of ESG disclosure (North, 1990). The concepts of ownership structure and corporate governance have been analyzed within the context of these theories.

Within the framework of legitimacy and stakeholder theories, Momin and Parker (2013) investigated ESG practices in Bangladeshi subsidiaries of multinational corporations. Their findings revealed that multinational ownership generates legitimacy pressures from both internal and external sources. Internal pressures arise from adherence to group-wide policies, while external pressures stem from aligning with the host country’s institutional environment. Fuadah et al. (2022) applied legitimacy theory to examine the impact of ownership structure on ESG disclosure in Indonesian firms, considering foreign, public, state, and family ownership. Their results indicated that foreign and public ownership positively influenced ESG disclosure, whereas state and family ownership showed no significant relationship. Nicolo et al. (2023) explored the effect of corporate governance mechanisms on ESG disclosures in the utilities sector, finding that board independence and CSR committees significantly enhance ESG disclosure. Huang (2022) developed a multidisciplinary theoretical framework that integrates ESG as a component of firm performance, identifying key stakeholders and their contributions. Al Amosh and Khatib (2022) utilized legitimacy and stakeholder theories to examine the impact of ownership structure on ESG disclosure in Jordanian firms, demonstrating that foreign and state ownership, as well as board independence, significantly influence ESG disclosure levels. Moreover, Zellweger et al. (2012) employed organizational identity theory to investigate how family businesses develop their firm image and its impact on performance, finding that family pride and community ties positively influence firm image, which in turn affects performance.

Both classical and contemporary institutional theories have attracted significant attention from ESG researchers. Classical institutional theories (Commons, 1931; Dorfman et al., 1963) and contemporary institutional theories (Schotter, 1981; North, 1990) classify institutions into formal (e.g., regulatory environments, governance) and informal (e.g., habits, norms, culture, religion) categories. Institutional theories may be particularly relevant for examining ESG performance in family businesses, given the complex interplay of formal and informal institutions that influence their behaviors and attitudes towards CSR, SR, and ESG performance. However, an analysis of managerial and financial practices in family businesses necessitates considering the SEW model proposed by Gómez-Mejía et al. (2007). This model, recognized as a significant development in family business research (Brigham & Payne, 2019, p. 326), highlights the unique non-economic objectives that guide strategic decision-making regarding resource preservation or enhancement (Berrone et al., 2012; Chrisman & Holt, 2016; Holt et al., 2018).

The SEW model suggests that family firms prioritize protecting their socioemotional wealth. Consequently, they may strategically accept certain types of business risks that support or align with SEW preservation, while generally exhibiting risk aversion towards decisions perceived as potential threats to their SEW (Gómez-Mejía et al., 2007; Berrone et al., 2012). Consequently, their ESG performance decisions may deviate from predictions based on traditional theories like signaling, stakeholder, or legitimacy theories, driven by intrinsic interests or other factors. For instance, Ramadan et al. (2023) observed that some GCC family businesses, particularly in contexts where disclosure is less strictly mandated or enforced, or reflecting motivations beyond compliance, may engage in social and environmental practices but refrain from fully disclosing them due to religious or cultural considerations. This contrasts with the increasing institutional pressures for formal ESG reporting on publicly listed firms in the region. Thus, the SEW approach questions the universal applicability of legitimacy, stakeholder, or signaling theories in understanding family business behavior.

Recognizing that traditional theories like signaling or stakeholder perspectives might not fully capture why family firms engage in certain ESG activities, this study turns the focus toward the SEW perspective, particularly within the GCC context. We explore how well the drive to preserve SEW explains the ESG performance of these family businesses, especially when weighed against explanations rooted purely in institutional theory or stakeholder pressures. Essentially, we investigate whether the unique, non-financial goals central to the SEW framework offer a clearer lens for understanding ESG performance than motivations like legitimacy or signaling suggested by prior work (Ramadan et al., 2023). Furthermore, we also look into how the age of the firm might moderate these dynamics.

2.1. Family and Non-Family Businesses and ESG Disclosure

The prevalence of family ownership in GCC corporations is a notable characteristic of the region’s business landscape (Ramadan et al., 2023). This is underscored by a KPMG (2018) survey, which highlighted that “in the GCC, perhaps more than anywhere else worldwide, family businesses are all around us. From small and medium enterprises (SMEs) to renowned multinational corporations, family-owned and managed companies in all guises from the backbone of the region’s economy” Further corroborating this, PWC’s (2019) Middle East family business survey indicated that “family businesses—in which shareholders are linked by blood ties—owned more than 60 percent of the region’s listed shares and employed over 80 percent of the workforce.” Consequently, it is reasonable to expect that ESG performance scores will exhibit variations between family and non-family businesses within the GCC, stemming from differences in their decision-making frameworks and reporting motivations. Theoretically, from the perspectives of legitimacy, stakeholder, and institutional theories, firms typically engage in ESG reporting to legitimize their operations, bolster their reputation, address diverse stakeholder expectations, and respond to formal and informal institutional pressures such as regulatory frameworks or religious norms (Alazzani et al., 2021; Arayssi & Jizi, 2023; Ramadan et al., 2023). However, these theoretical frameworks might not fully explain the behavior of family businesses, given the unique influence of familial ties between shareholders and management (Holt et al., 2018; Berrone et al., 2012), which may be more accurately interpreted through the SEW model (Swab et al., 2020).

Empirically, several studies have documented the impact of various ownership structures and corporate governance on ESG disclosure in the Middle East and GCC region. Some research has focused on the influence of state representatives or royal family members on boards. For example, Alazzani et al. (2021) examined whether royal family directors influence financial analysts’ consideration of ESG disclosure in their recommendations, revealing a negative moderating effect. Similarly, Arayssi and Jizi (2023) investigated the role of royal family members on boards regarding ESG disclosure levels, finding that they do not prioritize ESG reporting. However, they observed that board independence, gender diversity, and sustainability and governance committees positively correlate with ESG disclosure in GCC firms, suggesting that royal family members may achieve desired outcomes without extensive ESG disclosure. Furthermore, Bamahros et al. (2022), analyzing Saudi-listed companies, demonstrated that the presence of royal family members on boards, along with external audit committee members, significantly enhances ESG disclosure. It is crucial to distinguish these findings related to royal family or state representation from the behavior of private family firms driven by SEW considerations, which is the focus of our subsequent hypotheses.

Distinct from state or royal influence, other studies have examined private family ownership. Regarding family businesses defined by private, non-state, non-royal family control, Al Amosh and Khatib (2022) utilized content analysis of Jordanian industrial company reports to assess drivers of ESG disclosure. While their broader findings indicated positive correlations for foreign and state ownership, their particularly pertinent result for understanding governance within private family businesses centers on board structure. Specifically, they noted that board independence plays a crucial role in enhancing ESG disclosure in these privately controlled family firms. Additionally, Ramadan et al. (2023), through interviews with Big Four audit firm representatives across the GCC, identified factors influencing sustainability practice disclosures in contexts where disclosure is less strictly mandated or enforced, or reflecting motivations beyond compliance. Their results suggested that institutional theories are more applicable to family enterprises, while legitimacy and stakeholder theories better explain the behavior of non-family businesses. Notably, the study found that family companies, despite engaging in substantial sustainability and CSR practices, often refrain from disclosing them due to religious considerations or a belief that such disclosures are inconsequential.

As evidenced, much of the research on ownership structure and ESG disclosure in GCC companies has centered on the impact of royal family representatives on boards. Nevertheless, empirical observations highlight discernible differences in practices between family and non-family businesses (Ramadan et al., 2023). Based on the theoretical discourse surrounding SEW and empirical evidence pertaining specifically to private family firms (excluding state- or royal family-owned entities), we posit that ESG disclosures by family businesses in the GCC diverge from those of non-family businesses due to distinct motivations and institutional factors influencing family enterprise managers. Consequently, we formulate our first hypothesis:

H1. 

A significant difference exists in ESG performance between family and non-family publicly listed companies within the GCC region.

2.2. The Moderating Role of a Firm’s Age

The impact of firm age on managerial and financial practices has been a subject of ongoing debate within academic literature. This contention arises from the diverse transformations firms undergo throughout their life cycles. On one hand, some scholars assert that mature firms tend to exhibit more robust sustainability practices and achieve higher ESG scores. This argument is largely supported by resource-based theory, which posits that mature firms accumulate greater financial resources, specialized knowledge, and extensive experience over time. Consequently, these firms are more likely to engage in CSR and sustainability initiatives, leading to enhanced ESG performance (Lee et al., 2018; Hasan & Habib, 2017).

Conversely, others argue that mature firms, having reached a stage of stable financial and managerial performance, may perceive less necessity to invest in costly initiatives aimed at improving their image and reputation to satisfy stakeholders, as suggested by stakeholder theory. This perspective is particularly pertinent in developing economies, where investor priorities may differ. Furthermore, as discussed earlier in the theoretical framework, the SEW approach highlights how family firms might adopt non-conventional practices that deviate from mainstream theories, driven by unique motivations and determinants (Zellweger et al., 2012).

Empirical findings reveal that a substantial body of research supports the assertion that mature firms exhibit higher levels of ESG performance and social responsibility (SR), thereby validating resource-based theory (Hasan & Habib, 2017; Hasan et al., 2015). Conversely, a smaller subset of studies suggests that firms in their growth and early stages are more inclined to engage in CSR and sustainability practices to enhance their reputation and garner stakeholder approval (Lee et al., 2018). In this context, D’Amato and Falivena (2020) employed firm age as a moderator to examine the relationship between CSR and firm performance. Their study, analyzing listed companies in Western European countries, found that the inclusion of firm age and size as moderators weakened the association between CSR and firm performance, indicating a potential negative relationship. Additionally, Madden et al. (2020) applied socioemotional selectivity theory to investigate the evolution of CSR practices over time in family and non-family businesses. Their analysis of a large sample of firms over an extended period indicated that family firms initially invest more in CSR than non-family firms, but this investment tends to decrease as family firms age, reflecting increased selectivity.

Building upon existing research and empirical evidence regarding the influence of firm age on CSR practices within developing economies and family business contexts, we adopt the SEW framework, hypothesizing that firm age moderates the relationship between family business status and ESG performance scores, driven by family firms’ aversion to costly investments with uncertain financial returns and their heightened conservatism in preserving their socioemotional wealth, aligning with SEW theory; specifically, two scenarios emerge: older firms may either enhance ESG disclosure to safeguard reputational capital and ensure intergenerational continuity, or they may diminish disclosure due to prioritizing established norms and perceiving ESG investments as threats to control and resources, reflecting the nuanced interplay between risk aversion and SEW preservation, leading to our second hypothesis.

Accordingly, our second hypothesis regarding the moderating effect is as follows:

H2: 

Firm age moderates the relationship between family business status and ESG performance scores for publicly listed companies within the GCC region.

3. Methodology

3.1. Data and Sample

This study utilized a sample of 2382 firm-year observations from listed companies across the four major GCC markets, Saudi Arabia, Kuwait, Abu Dhabi, and Dubai, spanning the period 2016–2021. The selection of the 2016–2021 period was primarily dictated by the availability of consistent ESG performance score data from the London Stock Exchange Group (LSEG) (Refinitiv) Workspace database for GCC firms, as comprehensive coverage largely commenced in 2016. We acknowledge potential limitations associated with ESG data in the GCC region during the studied timeframe; ESG reporting standards were evolving and implementation was largely voluntary for firms—remaining so in Saudi Arabia and Kuwait, while becoming mandatory for listed firms in the UAE from 2022—potentially leading to variability in reporting quality and comparability across our sample. Furthermore, data availability itself acts as a constraint, limiting the sample to firms covered by the database.

ESG performance score data were obtained from the LSEG (Refinitiv) Workspace database. Firm-level data, including accounting information and ownership structure details used to identify family businesses, were manually collected from annual reports. Consistent with the SEW framework (La Porta et al., 1999) and focusing on private family firms, a firm was classified as a family business (dummy variable coded 1, 0 otherwise) if 25% or more of its shares were owned by members of the same family. This definition explicitly excludes firms where dominant ownership rests with royal families or state entities. A rigorous data cleaning process was implemented to exclude observations with missing values. The primary constraint on sample size was the availability of ESG performance scores, which were absent for a substantial number of listed companies. This meticulous approach resulted in a final sample of 2382 firm-year observations, ensuring robust testing of the study’s hypotheses

It should be noted that Winsorization was not applied to the continuous variables in our main analysis, as preliminary examination of the data distributions did not suggest the presence of extreme outliers that would unduly influence the results for our key variables of interest.

Table 1. Tabulation of country coded.

	Freq.	Percent	Cum.
Kuwait	774	32.49	32.49
Saudi Arabia	1038	43.58	76.07
United Arab Emirates	570	23.93	100.00
Total	2382	100.00

presents the distribution of observations by country. Notably, Saudi Arabia has the highest number of observations in the sample, comprising nearly half (43.58%) of the total. It is followed by Kuwait, which accounts for 32.49%, and then by the two UAE markets (Abu Dhabi and Dubai), which together represent 23.93%.

Table 2. Tabulation of year.

	Freq.	Percent	Cum.
2016	397	16.67	16.67
2017	397	16.67	33.33
2018	397	16.67	50.00
2019	397	16.67	66.67
2020	397	16.67	83.33
2021	397	16.67	100.00
Total	2382	100.00

shows the distribution of firms and observations by year. The consistent number of firms each year results from our requirement to include only firms with complete data available for all variables across the entire 2016–2021 period, following the exclusion of observations with missing values. This methodological choice ensures consistency but may introduce selection bias, a limitation discussed later. This indicates that the firms with available ESG performance scores remained steady throughout the study period.

3.2. Research Variables

Table 3. The variables, their definitions, and sources.

The Variable	Variable Definition	Source
	Dependent variables:
ESG score	The overall primary ESG performance score.	The LSEG (Refinitiv) Workspace database
	Independent variables:
Family control (FC)	A dummy variable is coded 1 if 25% or more of a firm’s shares are owned by members of the same family, 0 otherwise. This definition explicitly excludes firms where the dominant ownership rests with royal families or state entities.	The annual report
	Moderating variable:
Firm age (Age)	Measured as the total number of years since the firm’s establishment.	The annual report
	Control variables:
Firm size (LGTA)	Measured by the log of total assets	The annual report
Profitability (ROA)	Measured as net income divided by total assets.	The annual report
Leverage (LEV)	Measured as total debt divided by total equity.	The annual report
Board diversity (FD)	Measured by the number of female directors on the board of directors.	The annual report
Board independence (BInd)	Measured as the percentage of independent members on the board	The annual report

lists the dependent, independent, and control variables used in this study.

Dependent variable: (ESG score). This score measures a firm’s ESG performance based on publicly reported data. We utilize the overall primary ESG performance score from LSEG (Refinitiv) as it provides a comprehensive measure aligning with our study’s focus on the relationship between family control and holistic ESG outcomes. This score, reflecting reported performance directly linked to firm control, is more suitable than analyzing individual environmental, social, or governance pillars separately. Furthermore, it is preferred over the controversy-adjusted ESG Combined score to isolate the impact of family control on reported performance, distinct from external conduct risks.

Independent variable: Family control—(FC). A dummy variable is coded 1 if 25% or more of a firm’s shares were owned by members of the same family, and 0 otherwise. Consistent with the study’s focus on private firms within the SEW framework, this definition explicitly excludes firms where dominant ownership rests with royal families or state entities due to their unique institutional and political context, particularly their potential governing power in the GCC.

Moderating Variable: Firm age—(Age). This variable is measured as the total number of years since the establishment of the firm up to the year this study commenced.

Control Variables: In our research model, we included several control variables:

• Firm Size, measured as the logarithm of total assets (LGTA).
• Profitability is measured by Return on Assets (ROA), calculated as net income divided by total assets.
• Leverage, measured as total debt divided by total equity (LEV).
• Corporate governance variables, including board diversity, which is measured by the number of female directors on the board (FD), and board independence (BInd), measured as the percentage of independent members on the board.

Details of all variables are provided in Table 3.

3.3. Econometric Model Specification

Given the panel structure of our data (2016–2021), the choice between pooled ordinary least squares (POLS), fixed effects (FE), and random effects (RE) estimation warrants justification. We employ a POLS regression framework incorporating dummy variables to control for country-specific and year-specific fixed effects, complemented by a suite of firm-level control variables. The primary rationale for selecting POLS over an FE model stems from our core research objective: examining the impact of family control (FC) on ESG performance. Family control status is largely time-invariant or slow-moving for firms within our sample period. FE models analyze within-firm variation and thus cannot estimate the coefficients for time-invariant regressors, precluding a direct assessment of the main effect of family control. While random effects (RE) models permit the estimation of time-invariant variable effects, they rest on the strong assumption that unobserved firm-specific effects (e.g., inherent managerial ability, corporate culture) are uncorrelated with the explanatory variables in the model. This assumption is frequently challenged in corporate accounting and finance research, as such unobserved factors could plausibly correlate with both a firm’s ownership structure (family vs. non-family) and its propensity for ESG engagement, potentially leading to biased and inconsistent estimates if the assumption is violated (Wooldridge, 2010).

Considering the limitations of FE for our research objective and the potentially restrictive assumptions of RE, we determined that POLS with comprehensive controls for observable heterogeneity (firm size, return on assets, leverage, board independence, female directors) and fixed effects for country and year provide a suitable approach. While acknowledging that POLS does not explicitly account for unobserved time-invariant heterogeneity, we mitigate this concern through our extensive control set. Furthermore, to address potential violations of the standard OLS assumptions regarding error terms in a panel context, specifically heteroscedasticity and serial correlation within firms, all reported regression models in this study utilize robust standard errors clustered at the firm level (Petersen, 2009), implemented using Stata (v. 18). This approach provides more reliable statistical inferences in the presence of such issues.

The use of firm-level clustered standard errors effectively accounts for potential serial correlation (autocorrelation) of errors within each firm over time, a common concern in panel data. While tests like the Wooldridge test for autocorrelation are often applied in the context of fixed-effects models (Wooldridge, 2010), the clustering robust approach addresses this issue directly within our POLS framework using Stata (v. 18).

Consequently, and based on the above, we employed two research POLS models to test our hypotheses. The first model analyzed the relationship between a firm’s ESG score and its affiliation with family businesses as follows:

Model 1

ESG Score_i,t = β₀ + β₁FC_i,t + β₂LGTA_i,t + β₃ROA_i,t + β₄LEV_i,t + β₅BInd_i,t + β₆FD_i,t + β₇Age_i,t + ∑Country + ∑Year + ε_i,t

The second model investigated the moderating effect of firm age (Age) on the relationship between family control (FC) and ESG score, specified as follows:

Model 2

ESG Score_i,t = β₀ + β₁FC_i,t + β₂LGTA_i,t + β₃ROA_i,t + β₄LEV_i,t + β₅BInd_i,t + β₆FD_i,t + β₇Age_i,t + β₈FC*Age_i,t + ∑Country + ∑Year + ε_i,t

4. Analysis and Results

4.1. Descriptive Analysis

Table 4. Descriptive statistics.

Variable	Obs	Mean	Std. Dev.	Min	Max
ESG score	2382	0.056	0.134	0.000	0.455
FC	2382	0.153	0.36	0.000	1.000
LGTA	2382	20.307	1.762	17.723	24.235
ROA	2382	0.049	0.048	0.002	0.180
LEV	2382	0.470	0.262	0.075	0.884
BInd	2382	0.463	0.271	0.000	0.839
FD	2382	0.091	0.308	0.000	2.000
Age	2382	16.892	7.964	3.000	36.000

provides descriptive statistics for the variables used in this research. The dataset comprises 2382 firm-year observations. ESG score has a mean of 0.056 with a standard deviation of 0.134. The range (0 to 0.455) reveals significant interfirm heterogeneity regarding ESG performance. This heterogeneity is expected, as ESG reporting standards were evolving and implementation was largely voluntary for firms during the sample period (2016–2021). Notably, untabulated results reveal that UAE firms in our sample, on average, exhibited larger ESG scores compared to their Saudi and Kuwaiti counterparts. This is anticipated, as the UAE mandated ESG reporting in 2022, immediately following our sample period, likely influencing earlier voluntary efforts and contributing to the variability in ESG performance quality and comparability across the sample. Family control (FC), a binary variable representing family ownership, averaged over 0.153. Accordingly, about 15.3% of the sample firms are family-controlled. This proportion reflects the focus of the study on publicly listed firms and our specific definition criteria (≥25% ownership by a single family, excluding royal and state holdings). Log of Total Assets (LGTA), representing firm size, has a mean of 20.307 and a standard deviation of 1.762. The measured range (17.723 to 24.235) indicates a plausible distribution of firm sizes in the sample. The Return on Assets (ROA) mean is 0.049, with a standard deviation of 0.048. The low value (0.002) and the high value (0.180) reflect the positive profitability for the vast majority of the firms, but also the standard deviation reflects the variability in performance. Leverage (LEV) ratio has a mean of 0.470 with a standard deviation of 0.262. This means, on average, that firms in the sample borrow about 47% of their assets. The range (0.075 to 0.884) shows considerable variation in the capital structure of individual firms. Board Independence (BInd) has a mean and standard deviation, respectively, of 0.463 and 0.271. Its broad range (0.000 to 0.839) points to substantial variations in board composition concerning independence. The lower limit, which is 0.000, represents observations where firms had no independent directors. The mean number of female directors (FDs) per board in our sample is only 0.091 (with a maximum of two), indicating very low female representation. This finding aligns with the broader regional context provided by the Aurora50 and Heriot-Watt University GCC Board Gender Index Report (Aurora50 and Heriot-Watt University, 2024) which found women held just 5.2% of all listed company board seats across the GCC.

Firm Age (Age) has a mean of 16.892 years, and the standard deviation is 7.964. The range (3 to 36) reflects a varied sample of firms in terms of firm age, as well as both young and old firms.

These summary statistics are important to contextualize the following econometric analysis. The observed differences among the main explanatory variables, i.e., ESG scores, Board Independence, and Leverage, indicate possibly significant associations that will be further discussed in the coming sections.

Table 5. Pairwise correlations. *** p < 0.01, ** p < 0.05, * p < 0.1.

Variables	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
(1) ESG score	1.000
(2) FC	−0.037 *	1.000
(3) LGTA	0.670 ***	−0.009	1.000
(4) ROA	−0.030 *	−0.006	−0.248 ***	1.000
(5) LEV	0.279 ***	−0.055 ***	0.479 ***	−0.171 ***	1.000
(6) BInd	0.235 ***	0.001	0.273 ***	0.008	0.129 ***	1.000
(7) FD	0.130 ***	0.022	0.130 ***	−0.038 **	0.044 *	0.292 ***	1.000
(8) Age	0.071 ***	0.072 ***	0.226 ***	−0.140 ***	0.147 ***	0.013	0.047 *	1.000

presents the pairwise correlations for the variables used in this study. ESG score and firm size, defined by the logarithm of total assets (LGTA), have a significant positive correlation (0.670, p < 0.01). This indicates that larger firms tend to have higher ESG scores, which is consistent with the notion that larger firms have more resources to invest in ESG initiatives and face greater stakeholder pressure to demonstrate strong ESG performance. The bivariate analysis shows a significant positive correlation (0.279, p < 0.010) between ESG scores and leverage (LEV). Board Independence (BInd) is found to be significantly and positively associated (0.235, p < 0.010) with ESG scores, implying that firms with more independent boards tend to have better ESG performance. This aligns with the argument that independent directors enhance corporate governance and promote greater attention to stakeholder interests, including ESG considerations. A significant positive correlation (0.130, p < 0.010) is found between ESG scores and the presence of female directors (FDs), suggesting that gender diversity on boards positively influences ESG performance. The relationship between ESG scores and profitability (ROA) is low and negative (−0.030, p < 0.100), and the association between ESG and Family control (FC) is also low and negative (−0.037, p < 0.100). It is important to note that correlation does not imply causation. These bivariate correlations offer a preliminary indication of variable associations. However, to establish causality and account for potential confounding factors, results of multivariate analysis will be discussed in the following section.

Beyond pairwise correlations, we formally tested for multicollinearity using Variance Inflation Factors (VIFs) for all independent variables included in Model 1 and Model 2 (including the interaction term). The results, reported in

Table 6. POLS regression—Model 1.

ESG_Score	Coef.	St. Err.	t-Value	p-Value	[95% Conf]	[Interval]	Sig	VIF
FC	−0.011	0.006	−1.980	0.048	−0.022	0.000	**	1.01
LGTA	0.056	0.002	30.830	0.000	0.053	0.060	***	1.55
ROA	0.348	0.046	7.630	0.000	0.258	0.437	***	1.10
LEV	−0.020	0.008	−2.400	0.017	−0.036	−0.004	**	1.33
BInd	0.004	0.001	3.500	0.000	0.002	0.007	***	1.55
FD	0.015	0.008	1.900	0.057	0.000	0.031	*	1.10
Age	−0.002	0.000	−6.560	0.000	−0.002	−0.001	***	1.22
Country	−0.017	0.003	−5.660	0.000	−0.022	−0.011	***	1.42
Constant	5.701	2.644	2.160	0.031	0.516	10.887	**	NA
Mean dependent var		0.057		SD dependent var			0.135
R-squared		0.484		Number of observations			2382
F-test		130.198		Prob > F			0.000
Akaike crit. (AIC)		−4260.326		Bayesian crit. (BIC)			−4202.764

Note: Standard errors are robust and clustered by firm. Variance Inflation Factor (VIF) tests were conducted, and results indicated no significant multicollinearity issues (all VIFs < 5). Significance levels based on two-tailed tests: *** p < 0.01, ** p < 0.05, * p < 0.1.

and

Table 7. POLS regression—Model 2—The moderating effect of firm age.

ESG_Score	Coef.	St. Err.	t-Value	p-Value	[95% Conf]	[Interval]	Sig	VIF
FC	−0.053	0.013	−3.940	0.000	−0.080	−0.027	***	4.23
Age	−0.002	0.000	−7.430	0.000	−0.003	−0.002	***	1.42
FC*Age	0.002	0.001	3.050	0.002	0.001	0.004	***	4.82
LGTA	0.056	0.002	31.010	0.000	0.053	0.060	***	1.55
ROA	0.348	0.045	7.650	0.000	0.259	0.437	***	1.10
LEV	−0.02	0.008	−2.410	0.016	−0.036	−0.004	**	1.33
BInd	0.004	0.001	3.450	0.001	0.002	0.007	***	1.55
FD	0.015	0.008	1.900	0.057	0.000	0.030	*	1.10
Country	−0.016	0.003	−5.360	0.000	−0.021	−0.010	***	1.43
Constant	5.581	2.640	2.110	0.035	0.404	10.758	**	NA
Mean dependent var		0.057		SD dependent var			0.135
R-squared		0.486		Number of obs			2382
F-test		118.392		Prob > F			0.000
Akaike crit. (AIC)		−4270.432		Bayesian crit. (BIC)			−4207.114

Note: Standard errors are robust and clustered by firm. Variance Inflation Factor (VIF) tests were conducted, and results indicated no significant multicollinearity issues (all VIFs < 5). Significance levels based on two-tailed tests: *** p < 0.01, ** p < 0.05, * p < 0.1.

, confirmed that all VIF values were substantially below common thresholds (e.g., VIF < 5), indicating that multicollinearity does not pose a significant threat to the stability and interpretation of our regression estimates.

4.2. Hypothesis Testing

This section presents the results of two POLS regression models that examine the determinants of ESG scores. Table 6 displays the baseline model, while Table 7 illustrates the moderating effect of firm age on the relationship between family control and ESG scores. The baseline model (Table 6) accounts for 48.4% of the variation in ESG scores (R-squared = 0.484) and features a highly significant F-statistic (F = 130.198, p < 0.001), indicating a strong overall model fit. The findings show that family-controlled firms (FCs) have significantly lower ESG scores (β = −0.011, p = 0.048). This suggests that agency issues and potential conflicts of interest between controlling and minority shareholders may arise from family involvement in management and ownership. Consequently, family-controlled businesses might prioritize the interests of the family—such as maintaining control and extracting private benefits—over those of other stakeholders, consistent with the SEW model, which can result in lower ESG performance and reporting.

Large firms, as indicated by the logarithm of total assets, demonstrate significantly higher ESG scores (β = 0.056, p < 0.001). This finding aligns with previous studies suggesting that more established companies have greater resources and are thus subject to increased scrutiny from stakeholders, prompting them to invest more in ESG practices. Additionally, Return on Assets (ROA), a measure of profitability, shows a significant positive correlation with ESG scores (β = 0.348, p < 0.001). More profitable companies are likely to have additional discretionary resources to allocate toward ESG initiatives or may view ESG as a strategic investment that enhances long-term value. Conversely, increased leverage (LEV) is inversely related to ESG scores, with a statistically significant effect (β = −0.020, p = 0.017). Businesses with higher debt loads may face financial constraints that limit their ability to engage in ESG-related activities. This finding from the multivariate analysis suggests that, after controlling for other firm characteristics, higher debt burdens tend to hinder ESG performance in our sample. Companies with a larger number of outside directors (BInd) tend to have significantly higher ESG scores (β = 0.004, p < 0.001). Board independence improves director oversight, allowing for more objective and thorough evaluations of ESG reporting. Independent directors, free from management ties, are more likely to enhance corporate governance, prioritize stakeholder interests, and advocate for greater transparency in ESG disclosures. This enhanced monitoring can lead to better alignment with best practices and increased accountability for ESG reporting and performance.

The findings also indicate a moderately significant positive correlation between the presence of female directors (FDs) and ESG scores (β = 0.015, p = 0.057), suggesting a potential, albeit weak, link between gender diversity on boards and ESG performance. In contrast, older firms show a statistically significant negative relationship with ESG scores (β = −0.002, p < 0.001). This trend may reflect legacy operational structures or a slower adoption of contemporary ESG practices compared to younger firms. Established practices and cultures in older firms often hinder their ability to align with modern ESG standards, as they face higher adaptation costs and resistance to change. Their longstanding focus on financial performance creates a path dependency that obstructs a systemic shift toward ESG. Conversely, younger firms are under greater pressure from stakeholders to demonstrate strong ESG performance from the outset, a pressure that older, established firms do not experience as acutely.

Furthermore, the country variable shows a significant negative link to ESG performance (β = −0.017, p < 0.001), indicating that ESG scores do differ across the countries in our sample. This confirms significant variations in ESG performance levels between Saudi Arabia, Kuwait, and the UAE, even after accounting for firm-specific factors. As discussed in the sample and data section, and consistent with our explanation of Table 4 results, these differences likely reflect variations in national regulatory pressures and reporting frameworks; for example, ESG reporting was voluntary across these countries during our 2016–2019 sample, but became mandatory in the UAE in 2022, while remaining voluntary in Saudi Arabia and Kuwait. Differing market expectations, stakeholder demands, and cultural views on corporate responsibility probably also contribute. However, digging deeper into the specific reasons for these country-level differences is beyond this paper’s scope and points towards an area for future research.

Table 7 investigates how firm age moderates the relationship between family control and ESG scores. The inclusion of the interaction term (FC*Age) improves the model fit, with an R² of 0.486, F = 118.392, and p < 0.001. The results show a positive and highly significant coefficient for the interaction term (FC*Age) (β = 0.002, p = 0.002), indicating that firm age has a statistically significant positive moderating effect. This suggests that the negative correlation between family control and ESG scores is less pronounced in older family firms. In other words, the adverse impact of family control on ESG performance diminishes as family firms age.

This may be because family firms with long histories have had more time to develop and implement ESG practices, or they may be more attuned to reputational issues related to ESG as they mature. Family control significantly negatively impacts ESG scores (β = −0.053, p < 0.001) when age serves as a mediating factor. The effects of all other variables remain unchanged and consistent with those reported in the primary baseline model in Table 6.

4.3. Robustness Check

To address endogeneity concerns, we employed a two-stage least squares (2SLS) regression, following established methods in the literature. The results of the 2SLS model, shown in

Table 8. Robustness Test.

Effect of Family Control on ESG Performance Using the 2SLS Test
	Base Model	Moderating Model
VARIABLES	ESG_Score	ESG_Score
FC	−0.011 *	−0.053 ***
	(0.006)	(0.014)
LGTA	0.061 ***	0.061 ***
	(0.003)	(0.003)
ROA	1.251 ***	1.259 ***
	(0.445)	(0.445)
BInd	0.003 ***	0.003 ***
	(0.001)	(0.001)
FD	0.019 **	0.019 **
	(0.008)	(0.007)
Age	−0.001 ***	−0.002 ***
	(0.000)	(0.000)
FC*Age		0.002 ***
		(0.000)
Year	−0.003 **	−0.003 **
	(0.001)	(0.001)
Country	−0.019 ***	−0.018 ***
	(0.003)	(0.004)
Constant	5.192 *	5.065 *
	(2.821)	(2.819)
Observations	2382	2382
R-squared	0.389	0.390
Durbin score	Chi2(1) 4.804 *	Chi2(1) 4.916 *
Wu–Hausman	F(1,2372) 4.794 *	F(1,2371) 4.903 *

Note: Robust standard errors clustered by firm are in parentheses. Durbin–Wu–Hausman tests for endogeneity yielded results that are not statistically significant at the conventional 5% level (p > 0.05, as indicated by *). This suggests that endogeneity is not a significant concern according to this test, and Pooled OLS (POLS) may be considered an appropriate estimation method. Significance levels based on two-tailed tests: *** p < 0.01, ** p < 0.05, * p < 0.1.

, indicate that the core findings of the study persist: the coefficient associated with family control remains statistically significant and negative, indicating a robust inverse relationship. Concurrently, the interaction term (FC*Age) maintains its positive and significant coefficient, affirming its consistent moderating effect. The inferences drawn from the remaining variables are unaffected, mirroring the results presented in Table 6 and Table 7, thereby reinforcing the overall validity of our results and providing reassurance that endogeneity does not compromise the validity of our analyses. Additionally, to further assess the robustness of our findings, we conducted a Durbin and Wu–Hausman test to examine the presence of endogeneity. The results, which show p-values exceeding 5% in both models (as detailed in Table 8), suggest that our findings are not affected by endogeneity bias. Specifically, the Durbin–Wu–Hausman test examines if the OLS estimates are consistent, comparing them to 2SLS estimates where potentially endogenous regressors (like family control) are instrumented using other exogenous variables in the model. The non-significant test statistics (reported in Table 8) support the use of the POLS model results.

5. Discussion

A central finding of this study is the significant negative association between family control and ESG scores among GCC-listed firms. This indicates that private family-controlled firms (where 25% or more of their shares are owned by members of the same family excluding royal and state holdings) generally exhibit weaker ESG performance compared to their non-family counterparts. This observation is consistent with prior research, which suggests that family firms often prioritize SEW and family-centric objectives over the interests of broader stakeholder groups, as reflected in ESG metrics. This prioritization may lead to a focus on immediate financial gains or a reluctance to adopt practices that might compromise family control, even if those practices enhance long-term sustainability.

Furthermore, our analysis demonstrates a strong positive correlation between profitability and ESG performance in GCC-listed firms, suggesting that financially successful firms are more likely to achieve superior ESG outcomes. This finding supports the resource-based view, which posits that firms with greater financial resources are better equipped to invest in ESG-related initiatives. It also reinforces the perspective that firms increasingly recognize ESG activities as strategic investments that contribute to future value creation, rather than mere operational costs.

Conversely, leverage exhibits a negative correlation with ESG scores in our regression models. This indicates that firms with higher levels of debt may face financial constraints that limit their ability to allocate resources to ESG initiatives. Alternatively, this finding may reflect a trade-off between financial risk management and ESG considerations, where highly leveraged firms prioritize debt repayment and financial stability over ESG investments.

Board independence emerges as a robust positive predictor of ESG performance, underscoring the crucial monitoring role that independent directors play in fostering effective corporate governance and stakeholder relationships. Independent directors, with their impartiality and focus on broader stakeholder concerns, are more likely to support the implementation of robust ESG practices and ensure transparent reporting. This finding highlights the importance of independent oversight in enhancing ESG outcomes.

The presence of female directors on boards shows a moderately significant positive correlation with ESG performance. While this effect is less pronounced than that of other factors, it provides important evidence that gender diversity in board composition can lead to improved ESG practices and reporting among GCC-listed firms. This aligns with the existing literature, which suggests that diverse boards benefit from a broader range of perspectives and experiences, facilitating more balanced and comprehensive decision-making, particularly regarding ESG issues.

Firm age demonstrates a statistically significant negative relationship with ESG scores, indicating that, on average, older firms tend to have lower ESG performance. This may suggest that their legacy operational structures and practices are not optimally aligned with contemporary ESG principles. Additionally, it could reflect a slower pace of adaptation to evolving sustainability expectations compared to younger, more agile companies.

The interaction term (FC*Age) reveals a statistically significant moderating effect of firm age on the relationship between family control and ESG scores. Specifically, the negative correlation between family control and ESG performance is less pronounced in older family firms. This suggests that the potential adverse effects of family control on ESG outcomes are mitigated as family firms age. Several factors, particularly related to SEW, contribute to this phenomenon. Older family firms, having accumulated substantial SEW, may prioritize long-term reputational preservation and stakeholder relationships, aligning them more closely with ESG principles. They may have had earlier opportunities to integrate ESG considerations into their long-term strategic planning, recognizing that maintaining their legacy and family reputation, key components of their SEW, is tied to sustainability. Furthermore, they are likely more attuned to reputational risks associated with inadequate ESG practices, given their established presence and strong community ties. Additionally, older family firms may have undergone generational transitions, with subsequent generations demonstrating increased awareness and commitment to ESG principles, further safeguarding the family’s SEW through responsible practices.

While the SEW perspective provides a compelling explanation for the observed negative relationship between family control and ESG performance, particularly the prioritization of non-economic goals that might conflict with broad ESG engagement, it is crucial to acknowledge its limitations and the potential relevance of alternative theories. SEW may not fully account for family firm behavior in contexts with highly coercive institutional pressures (e.g., stringent mandatory ESG regulations) where institutional theory might predict convergence regardless of ownership type. Similarly, intense public scrutiny or campaigns by powerful stakeholder groups, as emphasized by stakeholder theory, could compel even SEW-focused firms to prioritize ESG demands to protect legitimacy and reputation beyond inherent SEW goals. Legitimacy theory also offers insights, suggesting that ESG actions might sometimes be symbolic gestures aimed at maintaining societal acceptance rather than substantive commitments driven by SEW or stakeholder value. Furthermore, the SEW framework itself is multifaceted, and different dimensions of SEW (e.g., family control vs. reputation vs. dynastic succession) might have conflicting implications for ESG (Berrone et al., 2012). Future research could benefit from exploring the interplay between these theoretical perspectives and different SEW dimensions to develop a more comprehensive understanding of ESG drivers in family firms.

6. Conclusions, Limitations, and Suggestions for Further Research

The primary objective of this paper is to examine the relationship between private family control (excluding state and royal), firm age and ESG performance in listed firms in the Gulf Cooperation Council (GCC) region. Using multivariate POLS regression and controlling for well-established firm-specific variables, our analysis provides novel insights about the profile of ESG adopters in GCC nations.

We show that family control is negatively and robustly associated with ESG performance. This corroborates prior research suggesting that family firms are motivated by SEW, and family-related goals, which potentially diverge from interests of various stakeholders captured in ESG metrics. This tendency could be due to an inclination towards family control, which can impede the acceptance of ESG practices seen as endangering that control.

The main contribution of the study is to examine the moderating effect of firm age on this relationship. The interaction term (FC*Age) has a statistically significant and positive coefficient supporting this moderation. In particular, older family firms will see less negative effect of family control on ESG performance. This indicates that the negative effect of family control on ESG performance attenuates with the passage of time for family firms.

Several factors contribute to this moderating effect. Older family firms, which have endured multiple business cycles and helped transition one generation of leadership to the next, will almost certainly have developed more sophisticated governance structures. Indeed, these structures enable a balance between family interests and stakeholder concerns in a broad Quadruple Bottom Line sense (including ESG considerations). These companies, due to their longer operational history and accumulated socioemotional wealth, may be more focused on long-term reputation management and stakeholder relationships, potentially mitigating the reputational fallout from poor ESG performance. This aligns with the SEW perspective, where preserving legacy and family reputation becomes increasingly important over time.

Additionally, the subsequent generations in older family firms may be more sensitive and devoted to ESG values as compared to the previous ones, thus reducing the negative effect of family control. Most importantly, family firms develop a significant amount of SEW through points of time. They have an incentive to safeguard this wealth, which means maintaining a good public face and strong stakeholder relations. Here, ESG engagement and reporting are seen not only as strategic tools, but as protectors and stabilizers of SEW, a statement of the family’s commitment to responsible and sustainable practices. This finding is particularly relevant for the GCC. Family-run businesses represent a significant component of the economy in this region, especially when considering privately held companies. Many such family enterprises are currently navigating the complex process of planning for the transfer of leadership and ownership to the next generation. While our study sample, consisting of publicly listed firms, indicates a lower proportion (15.3%) meeting our specific criteria for family control (defined as ≥25% ownership by a single family, excluding royal and state holdings), understanding the ESG dynamics within this publicly visible segment remains crucial.

This study contributes significantly to the literature in several ways. Firstly, it provides robust empirical evidence on the determinants of ESG performance in the under-researched GCC region, specifically highlighting the negative influence of family control. Secondly, and perhaps most importantly, it advances the SEW literature. Our findings not only affirm the relevance of SEW in explaining family firm behavior concerning ESG in a non-Western context but, crucially, extend the theory by demonstrating that firm age acts as a significant moderator. This highlights the dynamic nature of SEW priorities over a firm’s lifecycle, suggesting that the drive to preserve long-term SEW, including reputation and legacy, increasingly aligns older family firms with stakeholder expectations regarding sustainability. This nuanced understanding of how SEW considerations evolve with firm maturity offers a valuable refinement to the theory’s application in long-term strategic decision-making.

For GCC policymakers aiming to foster sustainable practices within the family business sector, our findings suggest value in initiatives promoting ESG adoption broadly among family enterprises. Efforts concentrated on enhancing corporate governance frameworks, transparency standards, and stakeholder engagement may prove particularly impactful within firms that operate independently of state or royal family ownership, potentially prioritizing younger ones in this segment, thereby effectively complementing national sustainability goals.

This study has limitations. First, our sample solely covers publicly listed GCC companies with complete ESG performance data available on the LSEG (Refinitiv) Workspace database for the 2016–2021 period. This reliance on available data excludes firms with missing ESG information, potentially introducing selection bias. Firms that do not disclose ESG data may differ systematically from reporting firms (e.g., in size, resources, governance, or commitment to sustainability). Consequently, our findings may not be fully generalizable to all GCC listed firms, particularly those not engaging in ESG reporting, or to privately held family businesses. Second, it is pertinent to acknowledge potential biases and limitations inherent in the ESG data source used in this study. While the LSEG (Refinitiv) Workspace database is a widely utilized and credible source for ESG performance scores, its scoring methodology relies heavily on publicly disclosed information. This may inherently favor larger firms with more resources dedicated to reporting, potentially underrepresenting the ESG efforts of smaller firms. Furthermore, variations in disclosure practices across firms and countries could influence the scores independently of actual underlying performance. Substantial granularity available within more detailed ESG data or the use of qualitative methods could facilitate exploring how family control and age differently affect individual ESG dimensions within Gulf societies. Moreover, examining the separate environmental, social, and governance pillars, especially utilizing more detailed or qualitative ESG data, presents another avenue for future research. Exploring responsibility as an alternative moderator (as family ownership concentration, family CEO tenure, or the presence of external advisors) could contribute additional findings. It may also be worthwhile to study the impact of specific ESG efforts, like adopting renewable energy, or presenting diversity programs for employees in family firms.

However, in this strategically important context, this study adds a unique contribution as to how ESG is being adopted. The work implications of our findings can benefit policymakers, family business owners, investors, and other stakeholders looking to encourage sustainable business in the GCC. In addition, this specialized study greatly contributes to existing accounting literature by providing a more textured account of the variables driving ESG uptake in this unique context.