Greenwashing the family name: Moderating effects of ownership on the relationship between ESG performance and firm performance

Abstract: Title: Greenwashing the family name - Moderating effects of ownership on the relationship between ESG performance and firm performance Course: BUSN79 Authors: Nils Larsson & John-John Teglund Supervisor: Reda Moursli Keywords: ESG, Family ownership, Concentrated ownership, Firm performance, Swedish ownership Purpose: The purpose is to investigate the relationship between ESG performance and firm performance. And further to explore if and how ownership structure moderates this relationship. Methodology: In the multivariate analysis, we deploy pooled OLS and random effects models and control for industry and year effects with robust standard errors clustered by firm. Further, we explore the individual ESG pillars, E, S and G. We take an instrumental variable approach using the yearly industry average of ESG. Finally, we validate the robustness of our results with a propensity score matched subsample. Theoretical perspective: The theoretical base used to develop our research questions are agency theory, stakeholder theory, resource-based view, organizational identity and socioemotional wealth theory. Empirical foundation: The sample consists of 1046 firm years from 328 Swedish firms, listed on The Stockholm Stock Exchange and First North Sweden for the period 2016-2022. Conclusions: First, we find a positive relationship between family ownership and firm performance. Second, family ownership and the social pillar negatively moderates the relationship between ESG performance and firm performance. Despite indications of a negative relationship, we cannot confidently establish a relationship between ESG performance and firm performance.