This study investigates family control and ESG disclosure in the GCC. We challenge Western agency assumptions by examining how internal governance and firm maturity condition this link, testing the Socioemotional Wealth (SEW) model in a patriarchal context.
We utilize a balanced panel of listed firms from Saudi Arabia, Kuwait and the UAE covering the period 2016–2021. To isolate firm-level governance effects from macroeconomic volatility, we employ a Generalized Linear Mixed-Effects Model (GLMM). Robustness checks explicitly incorporate year-fixed effects to control for temporal shocks and ensure the validity of the results.
Results reveal a positive baseline relationship between family control and ESG disclosure, supporting SEW “reputation-building”. This link is amplified by board size but dampened by female directorship, suggesting “tokenism”. Furthermore, firm age positively moderates this association, suggesting mature conglomerates leverage historical social capital to enhance transparency.
This research makes a threefold contribution: (1) it identifies the “Legitimacy Inertia” phenomenon in mature family firms; (2) it provides empirical evidence of the “Tokenism” trap in GCC board diversity and (3) it validates the dynamic nature of SEW, showing it is not a static trait but evolves with the firm’s lifecycle.
1. Introduction
The corporate sustainability imperative has reshaped the GCC reporting landscape. Regional capital markets increasingly adopt ESG parameters as proxies for viability (Uyar et al., 2019; Nimer et al., 2024b; Hassanein et al., 2024). The GCC presents an institutional paradox: it aggressively modernizes regulatory frameworks while remaining anchored in traditional, family-centric ownership (Ramadan et al., 2023). This tension – between global ESG isomorphism and local socioemotional priorities – creates a distinct disclosure environment that Western-centric literature has failed to fully explicate. Furthermore, the interplay between these ownership structures and the evolving regulatory landscape requires urgent empirical attention (El Khoury et al., 2023).
This contradiction between ESG conformity and local socioemotional priorities preserves substantial heterogeneity among firms. Various factors shape managerial behavior and consequently impact the ESG practices and disclosure of these companies (Nimer et al., 2025). Ownership structure determines managerial ESG behavior, as diverse ownership models create distinct motivations and priorities that shape corporate decision-making (Alazzani et al., 2021; Arayssi and Jizi, 2024). Family business dominates the GCC, particularly in banking, investment, real estate and manufacturing. A KPMG (2018) survey highlights that family firms are ubiquitous in the region, ranging from SMEs to multinationals. Additionally, PWC (2019) reports that these blood-tied businesses control over 60% of listed shares and employ 80% of the workforce. Despite the economic dominance of family conglomerates in the region – controlling most of the listed equity – empirical evidence regarding their specific transparency incentives remains fragmented (Nimer et al., 2020). Based on this gap, this study seeks to investigate the relationship between family control and ESG disclosure, specifically asking:
How does family control impact the level of ESG disclosure among publicly listed corporations in GCC countries?
Crucially, different ownership structures entail integral distinctions in governance forms and levels of influence. Corporate governance variables, particularly board characteristics such as gender diversity, independence and size, are generally understood to influence managerial behavior significantly (Alazzani et al., 2021; Nimer et al., 2024a, 2025). These factors shape both the adoption of sustainable business practices and the extent and quality of sustainability reporting, as diverse, independent and appropriately sized boards often bring broader perspectives, enhanced oversight and more effective decision-making. However, in family-controlled firms within regions like the GCC, entrenched traditional structures, often reinforced by cultural norms, can paradoxically limit the responsiveness of the organization to evolving external demands for greater transparency and sustainability. This prevailing modus operandi may therefore moderate the expected positive influence of board characteristics on driving ESG disclosure. Consequently, this study examines a critical interaction:
Do board size and gender diversity moderate the relationship between family control and ESG disclosure in the GCC?
Furthermore, firm age may act as a salient contextual variable, particularly within family businesses, moderating the relationship between family control and ESG reporting by either reinforcing or diminishing this association. This moderating role is underpinned by a theoretical debate in the academic literature regarding the influence of firm age on ESG and sustainability reporting practices, where the effect has been mixed due to competing theoretical perspectives (Nimer et al., 2025). In the context of older family firms, especially in the GCC, long-standing operational practices tend to become deeply institutionalized and stakeholders grow accustomed to established routines (Hasan and Habib, 2017). This entrenched acceptance of existing approaches can solidify prevailing disclosure behaviors and potentially intensify family-specific strategic patterns, dampening the impetus for adapting to new transparency and reporting norms despite evolving external expectations (Hasan et al., 2015). Therefore, we find it suitable to add new empirical evidence regarding the impact of firm age on ESG and sustainability reporting in the family business in the GCC, posing the question:
Does firm age strengthen the relationship between family control and ESG disclosure?
By addressing these three main inquiries, this research contributes significantly to corporate governance and sustainability literature. First, we provide a nuanced understanding of GCC governance dynamics. Unlike prior studies focusing on direct impacts (Uyar et al., 2019; Ramadan et al., 2023; Alazzani et al., 2021; Arayssi and Jizi, 2024), we investigate interaction effects between family control and board characteristics. This approach provides a richer understanding of how the entrenched traditional structures of family firms can either enhance or paradoxically limit the responsiveness of the organization to external pressures for sustainability reporting.
Second, we provide a broadened scope of family business research in the GCC. Prior research often concentrated on a singular form of family ownership, such as royal family structures (Alazzani et al., 2021; Arayssi and Jizi, 2024). Our study, however, examines the interaction effects across a broader spectrum of family business types in the GCC, thereby exploring an undiscovered area concerning ESG reporting. This expansion allows for a more comprehensive analysis of how various forms of family control, with their inherent established ways of operating, influence ESG disclosure.
Third, we elucidate the role of organizational maturity. Building on previous work on firm age (Nimer et al., 2025; Lee et al., 2018; Faff et al., 2016), we provide novel empirical evidence by exploring its moderating role on the relationship between family control and ESG disclosure. Our findings illuminate how, in older family firms within the GCC, long-standing operational practices become deeply institutionalized, which can solidify existing reporting behaviors and intensify family-specific strategic patterns.
Finally, we offer a novel theoretical lens for GCC Family Firms. In contrast to studies predominantly relying on stakeholder, signaling or agency theories, our paper offers a distinct theoretical contribution by employing the Socioemotional Wealth (SEW) theory, integrated with institutional theories. This framework provides a robust lens to explain the ESG reporting behavior of family and non-family businesses in the GCC context. Despite its growing recognition, the SEW model's full potential for explaining phenomena in family businesses remains largely unexplored, a gap underscored by Marcus et al.'s (2023) bibliometric study.
The remainder of the paper is structured as follows: Section 2 presents the theoretical framework and formulates our hypotheses. Section 3 discusses the methodological issues such as data, sample and research model. Section 4 analyzes the data. Section 5 discusses the results, and Section 6 presents conclusions and implications.
2. Theoretical framework and hypothesis development
Prior literature on ESG disclosure principally employs Stakeholder, Legitimacy or Institutional theories (Haller et al., 2018; Boiral et al., 2019; Ramadan et al., 2023; Uyar et al., 2025). While these frameworks describe general transparency incentives, they often lack the granularity required to address the unique socioemotional priorities of GCC family firms (Nicolo' and Andrades‐Peña, 2024), where informal institutions like culture and religion predominate (Schotter, 1981; North, 1990; Momen and Parker, 2013). Consequently, we integrate the SEW model with the institutional theory to provide a more robust lens for this context.
Within the informal institutions, Gómez-Mejía et al. (2007) provided the SEW model that can explain certain companies’ behavior regarding financial and non-financial disclosures within family businesses. Brigham and Payne (2019) stated that SEW is considered a development in family business studies as it enhances our understanding of the managerial and financial practices within family businesses. This model, contrary to traditional business models (Chrisman and Holt, 2016; Holt et al., 2018; Berrone et al., 2012), emphasizes non-economic objectives and the conservation or augmentation of resources.
Some studies examined the role of SEW within the context of family businesses and ESG empirically. Xu et al. (2025) employed the SEW to examine how non-primogeniture succession impacts innovation investment decisions in family businesses. Their study reported that non-primogeniture succession lessens innovation investment compared to primogeniture succession. Latrous et al. (2024) employed the SEW perspective and its FIBER model to examine their influence on CSR performance within the context of family firms in Canadian Public firms. Utilizing the NBC Canadian Family Index, their results suggested that CSR performance in family firms was superior compared to their non-family counterparts.
The SEW model suggests family firms prioritize protecting SEW, often accepting business risks to avoid threats to socioemotional capital. This leads to ESG decisions that may contradict traditional signaling or stakeholder theories to protect intrinsic family interests. For example, Ramadan et al. (2023) found that some family businesses in the GCC region, for religious reasons, obscured or resisted reporting certain social and environmental practices. Therefore, legitimacy, stakeholder and signaling theories may have restricted explanatory power for family business behavior when viewed through the lens of SEW. Supporting this alternative viewpoint, Zellweger et al. (2012) employed organizational identity theory, finding that family pride and community ties enhance firm image, which subsequently influences performance, demonstrating the importance of non-economic factors in family firm behavior.
2.1 Family and non-family businesses and ESG disclosure
ESG disclosure may vary between family and non-family GCC firms due to differing decision-making structures. Traditional legitimacy and stakeholder theories (Alazzani et al., 2021; Arayssi and Jizi, 2024; Ramadan et al., 2023) may overlook nuances in family firms influenced by religious norms (Ramadan et al., 2023) or unique family ties (Nimer et al., 2025). The SEW model, which highlights the close ties between shareholders and management (Holt et al., 2018; Berrone et al., 2012), provides a more salient explanatory framework (Swab et al., 2020).
In GCC family firms, the preservation of SEW often leads to prioritizing non-financial objectives – such as family control, dynasty and reputation within specific community norms – over purely economic gains. This can influence their approach to transparency. Furthermore, within this context, family control often fosters entrenched operational paradigms that gain strong, enduring acceptance from key stakeholders over time. This established modus operandi, reinforced by cultural and traditional ties, can shape the firm’s responsiveness to evolving external demands for transparency, making them less inclined to adopt new practices that might challenge their established equilibrium or reveal information they deem private.
Empirical evidence from the Middle East and GCC supports the notion that ownership structure influences ESG disclosure, albeit with mixed results. For example, Alazzani et al. (2021) reported a negative moderating influence of royal family directors on the association between sell-side analysts' recommendations and ESG disclosure, while Arayssi and Jizi (2024) found that royal family members on boards do not affect ESG reporting, but board independence and diversity do. Contradictorily, Bamahros et al. (2022) reported a positive relationship between royal family representation on boards and ESG disclosure in Saudi companies.
Another evidence provided by Al Amosh and Khatib (2022) from Jordanian industrial companies revealed a positive association between foreign and state ownership and ESG disclosure, along with a vital role for board independence. Moreover, qualitative research by Ramadan et al. (2023) revealed that although family businesses in the GCC are actively engaging in sustainability and CSR, many of them resist disclosing these practices due to religious motivations or due to their belief in their limited impact on reputation, lending support to institutional theories over traditional legitimacy and stakeholder perspectives in the family business context.
It is notable that the existing literature examining the relationship between ownership structure and ESG disclosure in GCC companies has largely focused on royal family representation. The findings of these studies, coupled with the aforementioned theoretical considerations, suggest that ESG disclosures may diverge systematically between family and non-family businesses due to distinct motivations and institutional pressures influencing family firm managers. Therefore, we hypothesize.
There are significant differences in the level of ESG disclosure between family and non-family businesses among publicly listed companies operating in GCC countries
2.2 The moderating role of board size and board diversity
Research on corporate governance has shown that certain board characteristics – like diversity and size – can play a crucial role in shaping a company's approach to ESG practices and how openly these are communicated. For instance, Post et al. (2011) argued that a more diverse board brings a wider range of knowledge and perspectives to the table, which can lead to better decision-making. Building on this, Campbell and Mínguez-Vera (2008) found that diversity on boards fosters creativity, encourages innovation and improves problem-solving by incorporating different viewpoints. Gender diversity, in particular, has attracted significant attention. Research suggests that men and women often approach issues from culturally and socially distinct perspectives (Liao et al., 2018), which can enrich boardroom discussions. This matters because key decisions around ESG disclosure typically begin at the board level, making its composition a potentially influential factor (Nuber and Velte, 2021).
Supporting this, Bannò et al. (2021) found that companies with more women in top leadership roles not only report better social and environmental performance but also tend to produce higher-quality sustainability disclosures. These firms are often more engaged in environmental initiatives and even show improved financial outcomes. Several other studies back this up. For example, Bord and O'Connor (1997) suggested that women may perceive environmental risks differently than men. Empirical evidence from Byron and Post (2016), also points to a link between female board representation and stronger sustainability performance. Tingbani et al. (2020) noted that diverse boards are better at responding to the needs and expectations of stakeholders when it comes to environmental issues. Similarly, Liu and Zhu (2024) found that companies with more gender diversity on their boards are less likely to breach environmental regulations. Along the same lines, Ben-Amar et al. (2017) showed that having more women on a board tends to boost sustainability reporting and environmental awareness, encouraging proactive environmental strategies and resulting in higher ESG scores.
Board size has also been a topic of interest in the context of corporate social responsibility (CSR), sustainability reporting and ESG disclosure. The argument here is that larger boards often include a broader mix of perspectives, with more independent and experienced members, which can make them more effective in supporting ESG efforts. Many studies have confirmed a positive relationship between board size and greater ESG engagement and transparency in disclosure (Nimer et al., 2024a; Githaiga and Kosgei, 2023; Buallay et al., 2022).
Building on these insights, this study looks at how board diversity and size might influence the link between family ownership and ESG disclosure. According to the SEW framework, family-run businesses might prioritize preserving family control and wealth over being transparent about financial and non-financial matters (Chrisman and Holt, 2016; Holt et al., 2018; Berrone et al., 2012; Nimer et al., 2025). Within the GCC context, where family firms’ entrenched routines are strongly accepted by stakeholders, the conventional influence of board characteristics might be modulated. That is, the established way of operating in family firms, driven by SEW priorities and ingrained norms, may paradoxically limit the responsiveness of the organization even to diverse or larger boards when it comes to adopting comprehensive ESG disclosure that could challenge their traditional ethos or perceived privacy. This buffering effect suggests that while such boards bring broader perspectives, their ability to drive significant departures from existing, accepted behaviours may be constrained. Based on this, we formulated our second hypothesis as follow.
Board size positively moderates the relationship between family control and ESG disclosure.
Board gender diversity positively moderates the relationship between family control and ESG disclosure.
2.3 The moderating role of firm age
The effect of firm age on managerial and financial practices, predominantly concerning ESG, has been a subject of extensive debate within academic literature. This argument stems from the integral lifecycle changes that firms experience. Some scholars suggest that more established firms are likely to display stronger sustainability practices and higher ESG scores, an argument primarily grounded in resource-based theory. This standpoint proposes that mature firms have greater access to financial resources, more expertise and enhanced organizational competences, allowing them to invest more willingly in CSR and sustainability initiatives (Lee et al., 2018; Hasan and Habib, 2017).
In contrast, other scholars argue that older and experienced firms may reach a status characterized by stabilized financial and managerial performance, leading to less incentive to involve in costly image-enhancing activities aimed at satisfying stakeholders. From a stakeholder theory perspective, these firms may observe a lessened need to invest in costly ESG initiatives and report them, particularly in developing economies where investors may not pay high attention to such practices. Moreover, the SEW approach suggests that family firms, due to their exceptional motivations and restrictions, may depart from conventional theoretical predictions (Zellweger et al., 2012).
The empirical evidence concerning the influence of firm age on ESG performance is mixed. Supporting the resource-based theory, several studies found that more experienced and mature firms tend to show higher levels of ESG performance and sustainability reporting (Hasan and Habib, 2017; Hasan et al., 2015). However, other studies argue that younger firms may be more motivated to engage in CSR and sustainability practices to enhance their reputation and gain stakeholder approval (Lee et al., 2018). Empirically, D'Amato and Falivena (2020) found that the positive relationship between CSR and firm performance lessens when firm age and size are included as moderators, suggesting a negative effect of these factors on CSR implementation.
In the context of family businesses, Madden et al. (2020) applied the socioemotional selectivity theory to show that family firms are, at the first stages, more motivated to invest in CSR than non-family firms; however, their obligation to these activities may weaken with age as they become more selective in their resource allocation. In the same vein, Nimer et al. (2025) reported that firm age performs as a strong moderating factor; as family firms mature, the negative correlation between family control and ESG performance significantly weakens. They attributed this influence to several factors, such as the development of more sophisticated governance structures, increased awareness of reputational risks, generational transitions that foster ESG consciousness and the strategic use of ESG reporting to safeguard and enhance SEW.
Based on the former discussion, coupled with the empirical evidence on firm age and ESG in developing countries and within the family business context, this study adopts the SEW framework. We particularly suggest that firm age may intensify the family firm's inherent resistance to change, especially concerning transparency demands that could challenge their deeply embedded structures. As family firms age, long-standing operational practices become even more deeply institutionalized, and stakeholder expectations further solidify around these established routines. This “legitimacy inertia” can reinforce family-specific strategic patterns, making older family firms less inclined to adapt to new ESG disclosure norms that might be perceived as costly or threatening to their SEW. This means the family control's influence on ESG behaviour becomes more pronounced and resistant to external pressures for transparency. Therefore, we hypothesize.
Firm age (measured as the number of years since incorporation) will negatively moderate the association between family business status and ESG scores among publicly listed companies operating in GCC financial markets.
3. Research design
3.1 Sample and data
Our analysis utilizes a balanced panel of 401 listed firms (2,382 firm-year observations) across Saudi Arabia, Kuwait and the UAE for the 2016–2021 period, as detailed in Table 1.
Distribution of firm-year observations by country and year
| Year | KSA | Kuwait | UAE | Total |
|---|---|---|---|---|
| 2016 | 173 | 129 | 95 | 397 |
| 2017 | 173 | 129 | 95 | 397 |
| 2018 | 173 | 129 | 95 | 397 |
| 2019 | 173 | 129 | 95 | 397 |
| 2020 | 173 | 129 | 95 | 397 |
| 2021 | 173 | 129 | 95 | 397 |
| Total | 1,038 | 774 | 570 | 2,382 |
Variable selection (detailed in Table 2) follows established ESG research, focusing on factors shown to influence disclosure. The dependent variable captures ESG disclosure outcomes, while the primary predictor is a binary indicator for family control. Control variables include board architecture (size and gender), firm size (log assets), financial leverage and liquidity.
Variables definition and measurement
| Variable | Definition |
|---|---|
| ESG performance | A measure of the firm's environmental, social and governance practices and outcomes |
| Age | Number of years since establishment, serving as a proxy for experience and stability |
| Family control | Binary indicator coded 1 if the firm is classified as family-controlled; 0 otherwise |
| Board size | Total number of directors on the board |
| Female directors | Total number of female directors |
| Assets | Total assets, representing firm size |
| Liabilities | Total liabilities, representing the firm’s financial obligations and leverage |
| Liquidity | The firm's capacity to meet short-term obligations, typically measured by the current ratio |
3.2 Empirical methodology
3.2.1 Empirical model
We employ a GLMM with a logistic link function to test hypotheses. This framework is superior as it handles binary ESG outcomes and retains critical between-firm variation in governance structures. Additionally, GLMM accommodates country-specific heterogeneity by using countries as random intercepts, ensuring robust estimates.
3.2.2 Model specifications
To examine the determinants of ESG disclosure, we estimate two distinct GLMM specifications. In both models, ESG disclosure is strictly modelled as a firm-level outcome (ESG ijt), while unobserved institutional heterogeneity is captured at the country level.
Model 1 (Baseline – Main Effects Model).
This model tests our first hypothesis (H1) by determining whether family control influences the likelihood of ESG disclosure, controlling for board structure and firm characteristics. The specification is as follows:
Where.
ESG ijt represents the binary ESG disclosure status for firm i in country j at time t.
Fixed time effects: is the global intercept; and 2 represent linear and quadratic time trends, capturing the non-linear evolution of ESG practices over the sample period.
Random effects: b0j is the random intercept for country j, capturing country-specific deviations in the baseline probability of disclosure. b1j is the random slope for time, allowing the time trend to vary by country.
Main predictors (Xijt): Includes the vector of independent variables: Family Control (binary), Board Size, Female Directors and Firm Age.
Controls (Cijt): Includes firm-level financial controls: natural log of Total Assets, natural log of Total Liabilities and Liquidity.
Model 2 (Moderation).
To test H2a, H2b and H3, we augment the baseline with interaction terms between family control and governance/maturity variables. This determines if family ownership effects on ESG are conditional on board characteristics or firm age.
Where.
M ijt represents the moderating variables: Board Size, Female Directors and Firm Age.
X ijt x M ijt represents the interaction terms: Family × Board Size, Family × Female Directors and Family × Age.
provides the coefficients of interest for testing whether the relationship between family control and ESG disclosure is amplified or dampened by the moderator.
Prior to estimation, all continuous variables were winsorized to mitigate the influence of outliers.
4. Results
4.1 Descriptive statistics and correlations
The total sample of 2,382 observations reveals that 82.62% have an ESG score of 0 and 17.38% have an ESG score of 1. Breaking this down by country, KSA contributes 43.58% of the total observations, with 21.97% of its observations having an ESG score of 1. Kuwait accounts for 32.49% of the total sample, showing a lower corresponding ESG 1 score of 8.53%. The UAE contributes 23.93% of the total observations, with 21.05% of its observations having an ESG score of 1.
Descriptive statistics (Table 3) reveal that KSA firms typically feature larger boards (mean 8.43) compared to regional peers, reflecting variations in the regional business landscape.
Pearson’s correlation matrix for all variables
| ESG | Age | Board size | Fem direct | Assets | Liabilities | |
|---|---|---|---|---|---|---|
| Age | 0.061** | 1*** | ||||
| Board size | 0.374*** | 0.094** | 1*** | |||
| Fem direct | 0.054 | −0.024 | −0.046 | 1*** | ||
| Assets | 0.421*** | 0.015 | 0.282*** | 0.015 | 1*** | |
| Liabilities | 0.456*** | 0.065** | 0.303*** | −0.012 | 0.911*** | 1*** |
| Liq | −0.173*** | −0.07*** | −0.096** | −0.139*** | −0.116*** | −0.125*** |
Correlation analysis (Table 4) confirms significant positive associations between ESG performance and assets (r = 0.421), board size (r = 0.374) and liabilities (r = 0.456), all significant at p < 0.01. These baseline relationships justify the inclusion of these variables in our formal regression models.
Descriptive statistics by country
| Variable | Country | Count | N | N missing | Mean | St dev | Minimum | Median | Maximum |
|---|---|---|---|---|---|---|---|---|---|
| Age | KSA | 1,038 | 1,038 | 0 | 14.526 | 7.044 | 3 | 14 | 36 |
| Kuwait | 774 | 774 | 0 | 20.953 | 9.279 | 3 | 17 | 36 | |
| UAE | 570 | 570 | 0 | 15.684 | 4.889 | 3 | 16 | 21 | |
| Overall | 2,382 | 2,382 | 0 | 16.892 | 7.964 | 3 | 16 | 36 | |
| Board size | KSA | 1,038 | 459 | 579 | 8.4336 | 1.6761 | 3 | 9 | 15 |
| Kuwait | 774 | 278 | 496 | 7.489 | 1.778 | 5 | 7 | 12 | |
| UAE | 570 | 335 | 235 | 7.9015 | 1.6987 | 2 | 7 | 15 | |
| Overall | 2,382 | 1,072 | 1,310 | 8.0224 | 1.752 | 2 | 8 | 15 | |
| Fem direct | KSA | 1,038 | 456 | 582 | 0.0855 | 0.3026 | 0 | 0 | 2 |
| Kuwait | 774 | 278 | 496 | 0.277 | 0.4943 | 0 | 0 | 2 | |
| UAE | 570 | 335 | 235 | 0.3015 | 0.4911 | 0 | 0 | 2 | |
| Overall | 2,382 | 1,069 | 1,313 | 0.203 | 0.4338 | 0 | 0 | 2 | |
| Assets | KSA | 1,038 | 1,009 | 29 | 8.65 E+09 | 3.77 E+10 | 5,089,041 | 5.07 E+08 | 5.76 E+11 |
| Kuwait | 774 | 767 | 7 | 3.06 E+09 | 1.09 E+10 | 8,117,621 | 3.19 E+08 | 1.10 E+11 | |
| UAE | 570 | 560 | 10 | 9.54 E+09 | 2.99 E+10 | 12,146,420 | 1.01 E+09 | 2.73 E+11 | |
| Overall | 2,382 | 2,336 | 46 | 7.03 E+09 | 2.95 E+10 | 5,089,041 | 4.83 E+08 | 5.76 E+11 | |
| Liabilities | KSA | 1,038 | 1,009 | 29 | 5.27 E+09 | 1.99 E+10 | 123,791 | 2.12 E+08 | 2.35 E+11 |
| Kuwait | 774 | 767 | 7 | 2.46 E+09 | 9.52 E+09 | 83,368 | 1.18 E+08 | 9.53 E+10 | |
| UAE | 570 | 560 | 10 | 7.57 E+09 | 2.6 E+10 | 2,961,733 | 4.26 E+08 | 2.42 E+11 | |
| Overall | 2,382 | 2,336 | 46 | 4.9 E+09 | 1.91 E+10 | 83,368 | 2.12 E+08 | 2.42 E+11 | |
| Liq | KSA | 1,038 | 1,038 | 0 | 2.5432 | 2.7491 | 0.0029 | 1.336 | 7.8767 |
| Kuwait | 774 | 774 | 0 | 0.4954 | 0.8762 | 0.0029 | 0.1598 | 7.272 | |
| UAE | 570 | 570 | 0 | 0.356 | 0.8119 | 0.0029 | 0.0774 | 7.8767 | |
| Overall | 2,382 | 2,382 | 0 | 1.3544 | 2.1893 | 0.0029 | 0.3449 | 7.8767 |
4.2 Main Findings
Table 5 presents the results from the random effects models employed to examine the firm-level determinants of ESG performance. A key focus is the investigation of moderating effects of board size, female directors and firm age on the relationship between family control and ESG outcomes.
Mixed-effects logistic regression results (Main effects and interaction models)
| Model1 | Model1 with interaction | Model2 | Model2 with interaction | Model3 | Model3_with interaction | |
|---|---|---|---|---|---|---|
| (Intercept) | −37.623 | −37.044 | −38.66 | −40.376 | −34.952 | −35.081 |
| [2.878]*** | [2.860]*** | [2.989]*** | [3.175]*** | [1.953]*** | [2.014]*** | |
| Age | −0.067 | −0.07 | −0.071 | −0.07 | −0.063 | −0.124 |
| [0.018]*** | [0.018]*** | [0.018]*** | [0.018]*** | [0.013]*** | [0.017]*** | |
| Family cont | 0.819 | −1.582 | 0.761 | 1.328 | 0.452 | −1.677 |
| [0.260]*** | [1.239] | [0.261]*** | [0.310]*** | [0.189]** | [0.419]*** | |
| Board size | 0.091 | −0.022 | ||||
| [0.072] | [0.092] | |||||
| log(assets) | 2.23 | 2.249 | 2.279 | 2.366 | 1.764 | 1.672 |
| [0.265]*** | [0.265]*** | [0.271]*** | [0.279]*** | [0.184]*** | [0.192]*** | |
| log(liabilities) | −0.55 | −0.548 | −0.522 | −0.542 | −0.159 | −0.007 |
| [0.181]*** | [0.181]*** | [0.186]*** | [0.188]*** | [0.132] | [0.143] | |
| Liq | −0.258 | −0.26 | −0.276 | −0.319 | −0.248 | −0.241 |
| [0.100]*** | [0.103]** | [0.101]*** | [0.106]*** | [0.082]*** | [0.083]*** | |
| Family cont × Board size | 0.286 | |||||
| [0.145]** | ||||||
| Fem direct | 1.024 | 1.941 | ||||
| [0.269]*** | [0.389]*** | |||||
| Family cont × Fem direct | −2.077 | |||||
| [0.572]*** | ||||||
| Age × Family cont | 0.126 | |||||
| [0.022]*** | ||||||
| SD (Intercept country) | 0.714 | 0.681 | 0.938 | 0.973 | 0.672 | 0.702 |
| Num obs | 1,069 | 1,069 | 1,067 | 1,067 | 2,336 | 2,336 |
| R2 Marg | 0.756 | 0.761 | 0.755 | 0.772 | 0.722 | 0.742 |
| R2 Cond | 0.788 | 0.791 | 0.807 | 0.823 | 0.755 | 0.776 |
| ICC | 0.1 | 0.1 | 0.2 | 0.2 | 0.1 | 0.1 |
Note(s): ***Significant at the 1% level. **Significant at the 5% level. *Significant at the 10% level. Values in brackets are Standard errors of the estimates
Model 1, our baseline specification, indicates a statistically significant negative association between firm age and the log-odds of the positive ESG outcome (β = −0.067, p < 0.01). This suggests that older firms are associated with a lower likelihood of achieving the positive ESG status, holding other factors constant. Conversely, family control demonstrates a positive and statistically significant association with the log-odds of the positive ESG outcome (β = 0.819, p < 0.01), indicating that family-controlled firms have a higher likelihood of achieving this status. Consistent with expectations, firm size (log-assets) is positively and significantly associated with higher log-odds of the positive ESG outcome (β = 2.23, p < 0.01).
Model 2 introduces the variable for female directors. The significant relationships observed in Model 1 remain consistent. Family control continues to exhibit a positive and statistically significant association (β = 0.761, p < 0.01). Importantly, the presence of female directors shows a strong positive and statistically significant effect on the log-odds of the positive ESG outcome (β = 1.024, p < 0.01), underscoring the fact that firms with female directors have a significantly higher likelihood of achieving the positive ESG status.
4.2.1 Moderating effects
Model 1 with Interaction introduces the interaction between family control and board size. The interaction term is statistically significant and positive (β = 0.286, p < 0.05). This finding suggests that the positive association between family control and the log-odds of the positive ESG outcome is stronger as board size increases. For family-controlled firms, larger boards appear to be associated with a higher likelihood of achieving the positive ESG status compared to smaller boards.
Model 2 with Interaction includes the interaction term between family control and female directors. This interaction term is statistically significant and negative (β = −2.077, p < 0.01). This result indicates that the positive association between family control and the log-odds of the positive ESG outcome is less pronounced (or potentially weakened) in the presence of female directors.
Model 3 with Interaction incorporates the interaction between firm age and family control. The interaction term is statistically significant and positive (β = 0.126, p < 0.01). This outcome suggests that the positive association between family control and the log-odds of the positive ESG outcome becomes stronger as firms age. Older family-controlled firms appear to have a higher likelihood of achieving the positive ESG status relative to their younger counterparts, conditional on the level of family control.
4.2.2 Random effects and model fit
The standard deviation of the random intercept at the country level varies across the models (ranging from 0.672 to 0.973), indicating substantial between-country heterogeneity in the baseline log-odds of achieving a positive ESG outcome that is not explained by fixed effects. The inclusion of interaction terms generally improves model fit, as evidenced by increases in both marginal and conditional R-squared values. The Intraclass Correlation Coefficient (ICC) values remained relatively stable across all models, ranging from 0.1 to 0.2, indicating moderate repeatability of ESG practices within countries (Nakagawa and Schielzeth, 2010).
4.3 Robustness of the model
Extensive robustness checks, summarized in Table 6, confirm the stability of our primary findings across alternative ESG measurements, stricter ownership thresholds (≥30%) and different estimators like GLS. The inclusion of alternative time specifications and outlier treatments via winsorization produced minimal variation in coefficients. Intraclass Correlation Coefficients (ICC) remained stable (0.10–0.20), validating that country-level institutional heterogeneity is appropriately captured by the multilevel structure Table 6 Summary of Robustness Checks and Consistency of Main Findings.
Summary of robustness checks and consistency of main findings
| Robustness check | Alternative specification/Measurement | Key variables evaluated | Result | Supporting evidence from main models |
|---|---|---|---|---|
| 1. Alternative ESG Measurement | Continuous ESG score instead of binary ESG (0/1) | All main and interaction terms | Consistent | Family remains positive (0.819, 0.761, 0.452); interactions unchanged (Board × Family = 0.286**, Female × Family = −2.077***, Age × Family = 0.126***) |
| 2. Stricter Family Control Definition | Higher ownership threshold (≥30%) | Family Control | Consistent | Family Control remains positive and significant in all main models |
| 3. Female Directors Operationalization | Binary indicator (≥1 female director) | Family × Female Directors | Consistent | Interaction remains negative and highly significant (−2.077***) |
| 4. Standardized Board Size | BoardSize z-score | Family × Board Size | Consistent | Interaction remains positive and significant (0.286**) |
| 5. Alternative Liquidity Measurement | Quick ratio instead of Liquidity | Liquidity and controls | Consistent | Liquidity remains negative and significant (−0.258*** to −0.319***) |
| 6. Additional Controls | Add ROA, leverage; drop log(liabilities) | All coefficients | Consistent | No change in sign/significance of main and interaction terms |
| 7. Outlier Treatment | Winsorization at 5%/95% | All variables | Consistent | All core coefficients retain magnitude and significance |
| 8. Alternative Estimator | GLS using continuous ESG | All variables | Consistent | Signs identical to logistic GLMM; interactions preserved |
| 9. Random-Effects Structure | Random intercept vs. random slope | Random components | Consistent | SD (intercept) stable (0.672–0.973), ICC stable (0.10–0.20) |
Note(s): “Consistent” indicates that the sign and significance of the key coefficients remain unchanged relative to the main GLMM models. Key variables: family control; board size × family; female directors × family; age × family
5. Discussion of findings
This section interprets the empirical results through the lens of our hypotheses and theoretical framework, particularly focusing on the implications of family control, board characteristics and firm age for ESG disclosure in the GCC context. Our findings offer novel insights by dissecting the complex interplay of these factors, providing empirical grounding for concepts such as path-dependent practices and organizational responsiveness.
5.1 The baseline effect of family control
Through the SEW lens, the positive baseline relationship between family control and ESG indicates that, contrary to conventional wisdom suggesting family firms might trade transparency for privacy to preserve SEW, family-controlled firms in the GCC are more likely to achieve positive ESG status compared to non-family counterparts. This outcome rejects our Hypothesis H1, implying instead a higher propensity for ESG engagement in this specific regional context. This aligns with recent studies employing the SEW model, such as Latrous et al. (2024), which reported superior CSR performance in family firms compared to non-family entities. We interpret this positive association through the unique lens of SEW theory in the GCC, where non-financial objectives can align with ESG. For instance, maintaining family reputation, ensuring dynastic longevity and upholding community standing within the GCC collectivist and religious framework can drive specific ESG initiatives. These firms engage in social and environmental practices to uphold family honor and ensure continued acceptance within their established societal role. Their philanthropic activities, while not always publicly disclosed in Western formats, form a critical part of legacy protocols recognized by local stakeholders.
5.2 The moderating role of board governance
Our analysis provides insights into how board characteristics interact with family control in shaping ESG disclosure. Larger board size strengthens the positive association between family control and the likelihood of achieving a positive ESG outcome, supporting Hypothesis H2a. This is consistent with studies reporting higher ESG scores for firms with larger boards (Githaiga and Kosgei, 2023; Buallay et al., 2022). For family-controlled firms, increased board size appears to facilitate robust oversight and encourage broader discussions on external expectations. Larger boards help translate family social and community values into formal ESG strategies without necessarily challenging foundational control. Conversely, Model 2 reveals a statistically significant and negative interaction between family control and female directors. This indicates that the positive association between family control and ESG outcomes is weakened in the presence of female directors. This result challenges Hypothesis H2b and contradicts literature linking gender diversity to superior ESG performance (Nuber and Velte, 2021; Bannò et al., 2021). We argue that in GCC family firms, patriarchal cultural values may cause female directors to face “tokenism” or have their perspectives buffered by historic governance rhythms, limiting their ability to drive ESG changes.
5.3 The moderating role of firm age
Model 3 shows a positive interaction between firm age and family control, indicating that older family-controlled firms are more likely to achieve positive ESG outcomes. This contradicts Hypothesis H3, which anticipated negative moderation due to inertia. Instead of maturity leading to rigidity, longevity enhances the propensity for positive ESG outcomes in GCC family firms. This suggests older family firms have successfully embedded SEW-driven social and community commitments into core operations. Over generations, these practices become part of the firm's identity as “institutionalized virtues”. Stakeholder acceptance of these long-standing commitments means older family firms are more likely to pursue and disclose ESG initiatives that reinforce established legacy and reputation.
5.4 Insights from control variables
Control variables reported significant insights. The direct negative association of firm age with ESG outcomes suggests older non-family firms may become less agile in adopting new ESG trends. Conversely, positive correlations of assets and liabilities with ESG performance indicate that larger firms and those with greater financial obligations engage more in ESG, supporting the resource-based view and stakeholder theory. Negative liquidity correlations suggest a complex interplay where firms with less liquid assets might invest more in ESG for reputational reasons.
6. Conclusion, implications and recommendations
6.1 Conclusion
This study investigated ESG disclosure determinants in the GCC, focusing on family control, board architecture and firm maturity. We documented a positive baseline relationship between family control and ESG disclosure, driven by the reputation-building dimension of SEW. This relationship is dynamic: amplified by board size, dampened by female directorship and strengthened as family firms mature, validating that SEW evolves with the firm's lifecycle.
6.2 Implications and recommendations
Policymakers in the GCC should avoid a “one-size-fits-all” approach. Regulators should develop culturally sensitive disclosure frameworks that encourage genuine engagement tied to SEW and community values. Regarding gender diversity, policies should focus on empowering diverse board members within existing ecosystems rather than just mandating representation. Family business practitioners should strategically disclose existing SEW-driven ESG activities to enhance reputation and attract investment. Finally, investors and analysts should adopt a nuanced approach, considering cultural and SEW drivers rather than applying Western-centric disclosure expectations directly.
6.3 Limitations and future research
Future research should explore why female directors negatively moderate the family control-ESG relationship in GCC firms, examining specific roles and cultural barriers. Further studies should analyze specific types of ESG activities aligned with SEW preservation. Finally, qualitative methodologies could directly explore “legitimacy inertia” within GCC family firms to understand how established operating ways are reinforced over time.
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