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The impact of ESG and executive structure on the default risk of family businesses: Evidence from China

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  • Liu, Bing
  • Zhang, Xiangmeng

Abstract

The study analyzes the Environmental, Social and Governance (ESG) performance, related to the probability of default risk in family businesses. The sample includes from 2015 to 2022 and comprises the 300 biggest family-owned businesses in China. This investigation finds that the ESG score correlates positively and statistically significantly with the Z-score. Both the environmental and social ESG scores support this. We include the number of family members on the board of directors and the degree to which family members are concentrated in the company's ownership. We discover a negative correlation between family representation on the board and the Z-score, and we find a non-linear relationship between the concentration of ownership and the Z-score. Ultimately, the influence of the ESG score on the Z-score is mitigated by the financial limits of family businesses.

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  • Liu, Bing & Zhang, Xiangmeng, 2024. "The impact of ESG and executive structure on the default risk of family businesses: Evidence from China," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s1544612323013284
    DOI: 10.1016/j.frl.2023.104956
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