The effect of ownership structure on CO2 disclosure: evidence from ESG European companies

Purpose The relationship between ownership structure and environmental performance has long been the focus of various researchers, academics and policymakers. This relationship varies depending on the types of shareholders, as each may follow different investment strategies that influence financial and non-financial performance, beyond just the investment horizon. To this extent, this article aims to study the impact of ownership structure on the carbon performance of European companies. Design/methodology/approach The initial selection of the sample consists of downloading data on industrial companies in the European Union belonging to the ESG index (14 countries) from 2006 to 2021. The authors obtained a final sample of 206 firms with a total of 3,296 observations (firm-years). To thoroughly analyze the relationship in question and with the presence of a set of control variables, the authors will use the generalized least squares method as a statistical analysis method. Findings The results revealed a positive and significant association between government ownership and CO2 performance. In addition, it appears that a higher environmental performance is associated with a lower percentage of institutional ownership. Concerning family ownership, the results show that family ownership has no significant effect on CO2 performance. Research limitations/implications The first constraint concerns the measurement of the explanatory variable, which reflects the environmental performance of companies based on information provided in the Thomson Reuters database, Asset4. A more refined measure can be constructed using manually collected data based on linguistic analysis, which can reflect not only the level of emissions but also the quality of environmental disclosure. A second limitation is the limited focus of the research on public, institutional and family involvement. Therefore, future studies will be considered as examining different types of ownership, such as managerial ownership. Practical implications This work aims to provide legislators with recommendations regarding the need to regulate ESG activities or practices that will influence the reporting process. As a result, the process of results management is intended to improve the informational content of accounting figures rather than reinforcing the opportunism of the manager. Also, this work is useful for institutional investors who seek to be socially responsible. It is about a responsible shareholder toward society and the environment; it also aims to protect the rights of future generations by valuing practices that respect the rules of good governance. Originality/value The originality of this study lies, on the one hand, in examining the relationship between ownership structure and carbon performance in the European context, a topic that is rarely addressed in the existing literature. On the other hand, the authors used the generalized least squares method to address heteroscedasticity and the generalized method of moments as a robustness test to confirm the validity of the results in the face of endogeneity. A key finding from the analysis is that family ownership structure does not have a significant effect on CO2 performance, which contrasts with other studies that generally suggest such ownership positively influences environmental performance. Thus, this study offers a new perspective on the relationship between corporate governance and environmental performance, suggesting that family ownership structure may not be as determinant a factor as previously anticipated.