The Impact of Family Business Governance on Environmental, Social, and Governance Performance

This study examines the impact of family directors, family shareholding, and family control on the environmental and social dimensions of ESG in family business governance. Scholars debate whether family businesses prioritize short-term gains over long-term ESG issues or, due to their long-term focus, integrate ESG into their strategies. One group of scholars argues that family businesses tend to focus excessively on short-term financial performance, neglecting long-term non-financial performance. In contrast, another group contends that due to socioemotional wealth considerations, family businesses place particular emphasis on long-term non-financial performance. This study utilizes data from publicly listed companies in Taiwan to conduct relevant research. Furthermore, we incorporate external governance variables to examine their impact on environmental and social performance. The research data come from the TEJ database. The sample is the annual data of listed companies in Taiwan. The sample period covers 2015 to 2022, with a total of 4377 company-year observations. The study finds that the corporate governance mechanisms of family enterprises have a negative and significant impact on environmental and social performance. However, external governance factors, such as higher institutional investor shareholding ratios, third-party-verified sustainability reports, and corporate governance evaluations, help mitigate these negative effects. Future research could extend the study period and explore additional external governance variables or alternative datasets to enhance the robustness and generalizability of the findings.