ESG performance under concentrated ownership: a principal–principal agency perspective

The study examines the effect of ownership concentration on Environmental, Social, and Governance (ESG) performance in emerging markets affected by principal-principal agency conflicts. Using a panel of 1,842 firm-year observations from listed firms in Thailand, Indonesia, Malaysia, and the Philippines during 2013 to 2021, the analysis measures ESG performance through composite and pillar-level scores from S&P Capital IQ Pro and captures ownership concentration through the equity stake held by the largest shareholder. After controlling for firm characteristics, macroeconomic conditions, industry fixed effects, and year fixed effects, the results reveal a strong negative association between ownership concentration and overall ESG performance. Concentrated ownership appears less willing to support ESG initiatives, potentially treating them as costly commitments that reduce the benefits of private control and divert resources from controlling shareholders. Pillar-level analysis indicates dimension-level heterogeneity in the association between ownership concentration and ESG performance. Ownership concentration is negatively associated with environmental, social, and governance performance, with the governance pillar showing the largest and most statistically significant estimated association. The study extends principal-principal agency theory into sustainability research and yields practical implications for regulators, investors, and policymakers in concentrated-ownership settings.