Firm ownership and ESG performance in European agri-food companies: The mediating effect of risk-taking and time horizon

The environmental, social, and corporate governance (ESG) performance of European agri-food companies is crucial amidst sustainability challenges. Employing property rights and agency theory, we investigate the influence of firm ownership structure on ESG performance, and the mediating role of risk-taking and time horizon. A recursive system of equations is employed to test the model using data from 936 European firms. The findings indicate that investor-owned firms (IOFs) outperform family firms and cooperatives in terms of ESG performance. Family firms demonstrate a longer time horizon, while IOFs exhibit greater risk-taking. Risk-taking and time horizon are positively and negatively associated with ESG performance, respectively. However, we find no evidence of a mediation effect. This paper contributes to the agency and property rights literature by exploring the implications of ownership structure for other firm characteristics and ESG performance, and outlines implications for policymakers and managers in the development of focused interventions towards sustainability.