CEO Hometown Preference in Corporate Environmental Policies

60 Pages Posted: 3 Jun 2021 Last revised: 1 Nov 2023

See all articles by Wei Li

Wei Li

Shanghai University of Finance and Economics

Qiping Xu

University of Illinois Urbana Champaign

Qifei Zhu

Nanyang Business School, Nanyang Technological University

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

Li, Wei and Xu, Qiping and Zhu, Qifei, CEO Hometown Preference in Corporate Environmental Policies (June 3, 2021). Available at SSRN: https://ssrn.com/abstract=3859116 or http://dx.doi.org/10.2139/ssrn.3859116

Wei Li

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433
China

Qiping Xu

University of Illinois Urbana Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Qifei Zhu (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

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