The effect of family and foreign ownership on environmental, social and governance (ESG) performance: evidence from Saudi-listed firms in light of Vision 2030

Citation

Faisal Alsayegh M, Al-Shaer H, Alandejani M & Ahmed Bajaber N (2026) The effect of family and foreign ownership on environmental, social and governance (ESG) performance: evidence from Saudi-listed firms in light of Vision 2030. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-09-2025-0787

Abstract
Purpose In Saudi Arabia, the dynamics between family and foreign ownership in the business landscape are shaped by the country’s regulatory environment. Family businesses are characterised by strong family ties, long-term planning and a focus on legacy. Also, foreign ownership is growing rapidly due to economic reforms and liberalisation. This study aims to investigate the influence of family and foreign ownership on firms’ environmental, social and governance (ESG) performance in Saudi Arabia. This study also examines the moderating effect of board structure on investment choices related to the ESG of family and foreign ownership that exists within the Saudi capital market. Design/methodology/approach This study uses data from 101 companies listed on the Saudi Stock Exchange covering the period 2016–2022. The authors collect ESG scores, foreign and family ownership and board structure variables from the Refinitiv Eikon database. The authors use ordinary least squares regression to conduct the results. Findings The results show a significant and positive association between family ownership and ESG performance. In contrast, foreign ownership is significant and negatively associated with ESG performance. Board structure reinforces the negative association between foreign ownership and ESG performance. However, it has no moderating role on the positive impact of family ownership on ESG performance. Originality/value Unlike prior studies that provided a more holistic view of the role of the ownership structure of a company in enhancing disclosure and governance practices in the Saudi context, this study focuses on two distinct categories of ownership, i.e. family and foreign ownership, and examines their effect on ESG performance. This study aims to provide an empirical investigation of the Saudi-listed firms in light of Vision 2030. Evidence highlights the unique cultural, institutional and regulatory context of Saudi Arabia. While family owners may prioritise social responsibility, foreign investors tend to prioritise short-term financial returns over long-term ESG goals. Vision 2030 is a key driver of ESG adoption, but challenges remain, and it will require some time to align local practices with global expectations.

Keywords
Family ownership; Foreign ownership; ESG performance; Saudi context; Vision 2030