The Interplay of Corporate Social Responsibility and Family Ownership in Saudi Arabia: Evidence From Stock Market Liquidity

ABSTRACT The role of corporate social responsibility (CSR) information in capital market remains contested within the disclosure and market liquidity literature. This study examines whether CSR disclosure influences stock liquidity, and whether this relationship is contingent on family control. Using 828 firm‐year observations for Saudi listed companies (2016–2021), we measure liquidity with Amihud's illiquidity and stock turnover, construct a CSR index that captures disclosure quality, and proxy family control by percentage of family ownership. Feasible generalised least squares estimates, corroborated by two‐stage least squares, Heckman selection, and propensity score matching, show a negative impact of CSR on stock liquidity. However, a positive interaction with family ownership indicates that this association is attenuated in family‐controlled firms, and may become favourable. Thus, market participants perceive CSR information more positively when disclosed by firms with informed controlling shareholders. Accordingly, CSR disclosure appears not to convey incremental value to equity investors on average, except when monitoring and information environments are stronger. These findings extend the literature on corporate disclosure and sustainable finance in emerging capital markets.