Balancing Socioemotional wealth and corporate financial performance: How family control enhances the financial value of ESG practices

The growing focus on corporate sustainability is prompting family firms worldwide to accelerate their adoption of environmental, social, and governance (ESG) practices. In this study, this study explores the influence of ESG performance on corporate financial performance (CFP) in family firms, focusing on how family control, ownership, leadership, and directorship moderate this relationship. Analyzing data from 72 Malaysian family firms between 2018 and 2022, this study extends the socio-emotional wealth theory by illustrating how family-specific factors shape the ESG-CFP dynamic, utilizing a hierarchical linear modeling approach. The findings reveal a positive relationship between ESG and CFP, with family control, ownership, leadership, and directorship further enhancing this connection. These results reflect how family firms pursue their socio-emotional wealth objectives through governance mechanisms. This study adds to the literature by offering valuable insights into the sustainability practices of family firms in developing countries.