Controlled Firms, Preferences, and Carbon Emissions

Controlled firms represent the dominant ownership structure globally, yet their environmental impact remains unclear. We test this for 3,769 firms from 35 countries using actual carbon emissions data and an environmental preference measure built using retrieval-augmented large language models. Overall, controlling owners’ preferences affect emissions but are insufficient to address environmental externalities. Controlled firms with low environmental preferences emit approximately 25% more carbon than widely held firms, while those with high environmental preferences have emissions no different than widely held firms. Controlled firms’ carbon performance is even worse in settings where marginal emissions abatement costs are high.