Does Ownership Structure Matter for ESG Score?

Nehna-Louise Møller-Pettersen

Student thesis: Master thesis


This paper examines whether ownership structure is a determinant factor for corporate social responsibility (CSR), measured by ESG score, in European public listed firms. Specifically, ownership concentration and identity are treated as separate but dependent dimensions of ownership structure.
To investigate the relationship, this study provides a systematic assessment of theoretical considerations and an empirical examination using panel data. The sample consists of 1,087 firms (35,149 firm-years) in the period 2010 to 2019. Employing fixed effect (within) regression as estimation technique, ESG performance is modeled against the test variables identifying ownership concentration and ownership identity, and control variables accounting for firm size, slack resources, and financial performance.
The results suggest that large shareholders actively engage in CSR policies, but their implications for the firm depend on the specifics owners’ characteristics, motivations and beliefs. The degree to which equity owners can implement their preference, therefore, depends on their power relative to other shareholders in the same firm.
As the relative controlling power of the largest shareholder increases, the impact on CSR, per owner identity, is found to be as follows. When the largest owner is a corporation, the government, or an individual investor, they have a negative effect on corporate ESG score - The last-mentioned, with greater impact than the former. If the largest owner is an Insider or Institutional investor, they positively affect corporate ESG score.
The study offers a new and updated perspective for investors, regulators and other stakeholders in understanding corporate commitment to CSR; by highlighting the relevance of accounting for shareholder heterogeneity when assessing the issue.

EducationsMSc in Finance and Investments, (Graduate Programme) Final Thesis
Publication date2020
Number of pages90