The effect of equity and bond issues on sustainability disclosure. Family vs non-family Italian firms

Purpose
This article studies firms’ attitudes to using sustainability reporting in order to facilitate the raising of external capital and the effect of the ultimate controlling owner on disclosure.
Design/methodology/approach
A disclosure index is constructed on the basis of sustainability reports, for a sample of 230 Italian listed firms. Empirical analysis is based on panel data models.
Findings
Firms are more prone to disclose when they are planning to issue equity/bonds. Family control does not affect disclosure in the case of bond issues but it has a moderating effect in the case of equity issuance. A family CEO, increasing the family’s sense of identification with the business, improves disclosure.
Research limitations/implications
Family ownership is the most viable measure to assess its socioemotional-wealth. This catches only the dimension related to family control and influence but it doesn’t take into account other aspects of SEW. Our study focuses on the relation between disclosure and financing choices, it doesn't analyze the relationship between disclosure and the success of equity/bond issues.
Practical implications
Family firms should improve their sustainability reporting, especially for firms operating in environmentally-sensitive industries. Sustainability reports could play an effective role as a control mechanism in a firm’s behavior towards the environment, society, employees and consumers.
Originality/value
The paper contributes to the studies on sustainability, showing that the nature of ultimate controlling owners and firms’ financing decisions affect disclosure. Moreover, it contributes to family firms literature shedding light on the effect of the family control and sense of identification with the firm on disclosure.