Born to behave: home CEOs and financial misconduct

Zicheng Lei; Dimitris  Petmezas; P. Raghavendra Rau; Chen  Yang

Born to behave: home CEOs and financial misconduct

Zicheng Lei, Dimitris Petmezas, P. Raghavendra Rau^*, Chen Yang

^*Corresponding author for this work

Accounting & Financial Management

Research output: Contribution to journal › Article › peer-review

Abstract

We examine the association between CEO birthplace proximity and financial misconduct. We find that CEOs managing firms near their birthplaces (“home CEOs”) are associated with lower levels of financial misconduct compared to non-home CEOs. This association is not attributable to differences in corporate governance. The relationship is stronger in areas with a strong local investment presence, higher levels of religious commitment, and among CEOs with longer tenures in their home state. Our findings are robust to addressing potential selection and omitted variable biases, as well as multiple robustness tests, including analyses of involuntary CEO changes and firm headquarters relocations. We also find a similar association for CFOs, with firms employing home CFOs exhibiting lower levels of financial misconduct.

Original language	English
Journal	REVIEW OF ACCOUNTING STUDIES
Publication status	Accepted/In press - 19 Sept 2024

Keywords

CEO reputational capital
birthplace identity
financial misconduct
corporate governance
local investors

Cite this

@article{5b2fdac3acdc40c589129826e859c218,

title = "Born to behave: home CEOs and financial misconduct",

abstract = "We examine the association between CEO birthplace proximity and financial misconduct. We find that CEOs managing firms near their birthplaces (“home CEOs”) are associated with lower levels of financial misconduct compared to non-home CEOs. This association is not attributable to differences in corporate governance. The relationship is stronger in areas with a strong local investment presence, higher levels of religious commitment, and among CEOs with longer tenures in their home state. Our findings are robust to addressing potential selection and omitted variable biases, as well as multiple robustness tests, including analyses of involuntary CEO changes and firm headquarters relocations. We also find a similar association for CFOs, with firms employing home CFOs exhibiting lower levels of financial misconduct.",

keywords = "CEO reputational capital, birthplace identity, financial misconduct, corporate governance, local investors",

author = "Zicheng Lei and Dimitris Petmezas and Rau, {P. Raghavendra} and Chen Yang",

year = "2024",

month = sep,

day = "19",

language = "English",

journal = "REVIEW OF ACCOUNTING STUDIES",

issn = "1380-6653",

publisher = "Springer New York",

}

TY - JOUR

T1 - Born to behave: home CEOs and financial misconduct

AU - Lei, Zicheng

AU - Petmezas, Dimitris

AU - Rau, P. Raghavendra

AU - Yang, Chen

PY - 2024/9/19

Y1 - 2024/9/19

N2 - We examine the association between CEO birthplace proximity and financial misconduct. We find that CEOs managing firms near their birthplaces (“home CEOs”) are associated with lower levels of financial misconduct compared to non-home CEOs. This association is not attributable to differences in corporate governance. The relationship is stronger in areas with a strong local investment presence, higher levels of religious commitment, and among CEOs with longer tenures in their home state. Our findings are robust to addressing potential selection and omitted variable biases, as well as multiple robustness tests, including analyses of involuntary CEO changes and firm headquarters relocations. We also find a similar association for CFOs, with firms employing home CFOs exhibiting lower levels of financial misconduct.

AB - We examine the association between CEO birthplace proximity and financial misconduct. We find that CEOs managing firms near their birthplaces (“home CEOs”) are associated with lower levels of financial misconduct compared to non-home CEOs. This association is not attributable to differences in corporate governance. The relationship is stronger in areas with a strong local investment presence, higher levels of religious commitment, and among CEOs with longer tenures in their home state. Our findings are robust to addressing potential selection and omitted variable biases, as well as multiple robustness tests, including analyses of involuntary CEO changes and firm headquarters relocations. We also find a similar association for CFOs, with firms employing home CFOs exhibiting lower levels of financial misconduct.

KW - CEO reputational capital

KW - birthplace identity

KW - financial misconduct

KW - corporate governance

KW - local investors

M3 - Article

SN - 1380-6653

JO - REVIEW OF ACCOUNTING STUDIES

JF - REVIEW OF ACCOUNTING STUDIES

ER -

Born to behave: home CEOs and financial misconduct

Abstract

Keywords

Fingerprint

Cite this