Local Boy Does Good: CEO Birthplace Identity and Corporate Social Responsibility

Abstract

Prior literature shows that CEO characteristics play an important role in explaining the firm’s decision to engage in corporate social responsibility (CSR). However, this literature overlooks one critical factor: CEO identification with their birthplaces. Based on social identity and legitimacy theories, we argue that birthplace identity has a real effect on social giving through CSR engagement. In a sample of 703 firms from multiple industries, we show that firms run by CEOs with high levels of birthplace identification (home CEOs), are associated with higher levels of CSR. The relation is more pronounced for CEOs with deeper home connections. CSR investments by home CEOs are also associated with increases in firm value.

Keywords: Corporate Social Responsibility; CEOs; legitimacy; social identity; birthplace identity

JEL Classification: M14, G34, G39