Family firms and environmental financing: Evidence from green bond issuance

Guided by the socioemotional wealth (SEW) perspective, this paper empirically analyzes the environmental orientation of family firms, employing the issuance of green bonds as an indicator of commitment to substantive environmental practices. Using a global dataset comprising 11,511 corporate bond issuances over the 2013–2022 period, we document that among firms that issue corporate bonds, family firms exhibit a lower likelihood of issuing green bonds than non-family firms. This finding suggests that the preservation of SEW may lead to a more cautious or reluctant strategy regarding the adoption of significant, high-visibility environmental financing initiatives. Importantly, we find a distinct generational effect. Founder-led family firms, which arguably have the highest SEW salience, show a significantly greater likelihood of issuing green bonds compared to later-generation family firms. This suggests that SEW concerns might motivate founder-owners toward long-term environmental signaling. Additionally, the appointment of a non-family CEO is found to increase the likelihood of green bond issuance more profoundly in founder-led than in descendant-led firms. Collectively, our results underscore how generational stage and leadership structure critically modulate environmental sustainability practices in family enterprises. Ultimately, this study contributes to the literature by providing both a theoretical explanation and managerial guidance aimed at fostering greater participation in the green bond market by family firms.