Ownership and Environmental, Social, and Governance Equilibria in European Listed Firms

ABSTRACT

This study examines how ownership concentration shapes firms' Environmental, Social, and Governance (ESG) outcomes (performance and disclosure), addressing gaps related to underexplored owner types, nonlinear effects, and the distinction between ESG performance and disclosure. Using fixed‐effects panel regressions with linear and quadratic ownership specifications of 386 European listed firms over a 9‐year period, we analyze six ownership types measured as equity stakes above 3%. Results indicate that founding family ownership is consistently and negatively associated with ESG outcomes, while institutional, foundation, and government ownership exhibit significant nonlinear relationships with inverted U‐shaped patterns and ownership‐specific thresholds. Corporate and holding ownership are generally linked to weaker ESG outcomes. Overall, the findings underscore ownership concentration as a key governance mechanism shaping ESG outcomes, with implications for investors, executives, and policymakers designing ownership‐sensitive sustainability strategies.