Legitimacy Pressures and Socioemotional Wealth Priorities: Understanding Family Business Influence on the Relationship Between Environmental Performance and Corporate Controversies

The paper examines the influence of environmental performance on corporate controversies of public listed firms in the ASEAN‐5 countries with a special focus on how family business moderates this relationship. Grounded by socioemotional wealth theory and legitimacy theory using 1616 firm‐year observations between 2017 and 2024. Panel data regressions are employed to measure the relationship and further sensitivity analysis are conducted to ensure consistency of the results. The findings indicate that environmental performance and corporate controversies have a statistically significant negative relation, meaning that companies with a higher environmental performance have lower levels of corporate controversies. Interestingly, such a relationship is reinforced by the existence of family business, which implies that firms owned by families convert environmental efforts into reputational defense and the avoidance of controversies is greater. The implication of these findings is that the maintenance of socioemotional wealth and increased legitimacy issues are a source of motivation that drives family firms to focus more on environmental performance as a strategic tool to minimize corporate scandals. The research has significant implications for regulators and policymakers in the process of structuring governance systems that will promote environmental responsibility, especially in the economic systems where family‐based firms operate. The study is an addition to the existing literature since it offers new empirical data on the interaction between family ownership, environmental performance, and corporate controversies within the ASEAN‐5 environment.