Does a CEO’s Cultural Heritage Affect Performance Under Competitive Pressure?
Review of Financial Studies, Vol. 31, No. 1, 2018
58 Pages Posted: 1 Feb 2017 Last revised: 26 Mar 2018
Date Written: December 17, 2016
We exploit variation in the cultural heritage across U.S. CEOs who are the children or grandchildren of immigrants to demonstrate that the cultural origins of CEOs matter for corporate outcomes. Following shocks to industry competition, firms led by CEOs who are second- or third-generation immigrants are associated with a 6.2% higher profitability compared with the average firm. This effect weakens over successive immigrant generations and cannot be detected for top executives apart from the CEO. Additional analysis attributes this effect to various cultural values that prevail in a CEO’s ancestral country of origin.
Keywords: CEOs, Cultural values, Competition, Performance, Corporate investments
JEL Classification: G30, M14, Z1
Suggested Citation: Suggested Citation