Local Boy Does Good: The Effect of Home CEOs on Firm CSR

75 Pages Posted: 9 Jan 2021 Last revised: 8 Mar 2023

See all articles by Zicheng Lei

Zicheng Lei

King's College London

Dimitris Petmezas

Durham University Business School

P. Raghavendra Rau

University of Cambridge

Chen Yang

University of Glasgow

Date Written: March 8, 2023

Abstract

Home CEOs, CEOs heading firms located in their home birth counties, conduct greater levels of corporate socially responsible (CSR) activities than non-home CEOs. The CSR activities by these home CEOs increase firm value. Following CSR activity at firms managed by home CEOs, local employees are more productive, the firms earn higher sales growth, and charge higher markups than firms run by non-home CEOs. Strikingly, only firms conducting CSR activities with home CEOs earn higher stock returns during the 2008-2009 financial crisis and the COVID-19 pandemic periods, respectively. Overall, our results suggest that engaging in CSR will not necessarily increase levels of social trust and firm value. The social identity of the CEO also matters.

Keywords: Corporate Social Responsibility (CSR); CEOs; Home Bias, Trust; Social Identity; Firm Value

JEL Classification: M14, G34, G39

Suggested Citation

Lei, Zicheng and Petmezas, Dimitris and Rau, P. Raghavendra and Yang, Chen, Local Boy Does Good: The Effect of Home CEOs on Firm CSR (March 8, 2023). Available at SSRN: https://ssrn.com/abstract=3718687 or http://dx.doi.org/10.2139/ssrn.3718687

Zicheng Lei

King's College London ( email )

Bush House
30 Aldwych, Strand
London, WC2B 4BG
United Kingdom

Dimitris Petmezas (Contact Author)

Durham University Business School ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom

P. Raghavendra Rau

University of Cambridge ( email )

Cambridge Judge Business School
Trumpington Street
Cambridge, Cambridgeshire CB21AG
United Kingdom
3103626793 (Phone)

HOME PAGE: http://www.raghurau.com/

Chen Yang

University of Glasgow ( email )

Adam Smith Business School
Glasgow, Scotland G12 8LE
United Kingdom

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