The veil of secrecy: Family firms’ approach to ESG transparency and the role of institutional investors

Our analysis explores the relationship between family ownership and ESG (Environmental, Social, Governance) transparency in Italian companies from 2016–2020, employing agency theory, stakeholder theory, and Socio Emotional Wealth (SEW). We find that family-owned firms typically exhibit lower ESG transparency, especially in social aspects, due to priorities like privacy and legacy. Institutional investors (IIs), however, play a crucial role in enhancing transparency, mitigating the usual opacity in these firms. This highlights the importance of IIs in advancing ESG disclosures, providing strategic insights for addressing the transparency challenges associated with family ownership and improving governance practices to narrow the corporate transparency gap.