<scp>ESG</scp> Performance, Family Ownership, and Corporate Risk‐Taking: The Moderating Role of the <scp>CSR</scp> Committee

Abstract

ABSTRACT In today's dynamic business landscape, the importance of ESG factors in shaping risk management strategies has gained increasing attention. Within this context, corporate governance mechanisms play a key role in enhancing the effectiveness of ESG efforts and linking them to improved risk management. This research explores the potential relationship between ESG performance and firm risk while examining the moderating effect of family ownership and CSR committees. Based on 671 firm‐year observations from 61 French listed companies in the SBF120 index over the period 2012–2022, we performed EGLS regression analysis and robustness models to reinforce the validity and reliability of our results. Our findings indicate that ESG performance has a negative and significant impact on firm risks, specifically liquidity and default risks, as measured by cash and leverage. Firms with higher ESG scores tend to exhibit lower default and liquidity risks, suggesting that strong ESG practices contribute to better financial stability. Particularly, the effect of ESG performance in reducing firm risks is stronger in non‐family firms compared to family firms. In addition, the CSR committee has a significant and positive moderating role in reinforcing the impact of ESG performance in mitigating firm risks. These results are important for both businesses and investors, as ESG performance can lead to more stable cash flows and lower corporate debt, thereby improving investors' confidence and companies' financial resilience.