Corporate social performance of family firms and shareholder protection: An international analysis

We study whether differences in shareholder protection by countries are important in explaining lower corporate social performance (CSP) of family firms vis-à-vis non-family firms. We create a dataset covering 46 countries for the period 2002–2016. Using a novel approach, we show that the difference in CSP of family firms relative to similar non-family firms is smaller when family firms experience stronger minority shareholder protection to reduce conflicts of interest than non-family firms do. Moreover, we find that the difference in CSP of family firms relative to similar non-family firms is larger when family firms experience stronger shareholders’ rights in corporate governance than non-family firms do. Our results support the view that differences in country-level shareholder protection play an important role in explaining the differences in CSP between family and non-family firms.