Substance versus symbolism: how ESG dimensions relate to financial performance in family firms

Purpose This study examines how ESG performance, environmental innovation, exposure to ESG controversies, and internal governance mechanisms are associated with the financial performance of listed family firms. Socioemotional wealth (SEW) is used as an interpretive lens rather than measured as a moderator. Design/methodology/approach A near-balanced panel of 83 firms from the Global 500 Family Business Index over 2016–2023 (662 firm-year observations) is analysed using two-way fixed effects models with Driscoll-Kraay standard errors. Robustness checks include clustered and bootstrap inference, lagged specifications and an alternative measure of controversy. Regional differences are examined in an exploratory pooled interaction model. Findings ESG performance is positively associated with Tobin's Q but not with accounting metrics. Environmental innovation is associated with higher ROE, although this association does not survive conservative inference. Controversy exposure is associated with lower ROA and ROE. The only result robust to every inference procedure concerns governance: where boards reach a critical mass of female directors, the market valuation of ESG is reversed rather than amplified. Practical implications ESG score optimisation should not be treated as a route to accounting value in family firms. Boards should not assume that formal gender diversity reinforces the credibility of ESG commitments. Originality/value The study integrates ESG performance, environmental innovation, controversy exposure, and board governance into a single framework for large family firms and shows that board composition operates as a boundary condition of the ESG market signal.