CEO Hometown Preference in Corporate Environmental Policies
60 Pages Posted: 3 Jun 2021 Last revised: 1 Nov 2023
Date Written: June 3, 2021
Abstract
We exploit within-firm variations in plant-level toxic releases to examine the effect of managerial hometown preference on corporate environmental policies. We find that pollution levels are about 30% lower for plants located near CEOs' hometowns. This reduction is facilitated by resource-intensive pollution control efforts, including source reduction and waste management activities. Analyses using CEO turnover provide causal inferences. Local residents benefit from CEO hometown pollution reduction, as localities hosting more hometown plants experience improved environmental conditions and better residential health outcomes. On the other hand, some evidence suggests CEOs' hometown preference is related to agency frictions. Overall, our findings reveal the impact of CEOs' personal motivations on corporate pollution dynamics and their consequential effects on the well-being of local communities.
Keywords: CEO, Hometown preference, Corporate environmental policies, Residential welfare
JEL Classification: G30, G32, G02
Suggested Citation: Suggested Citation