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

Abstract

We examine the effect of CEO birthplace bias on firm corporate social responsibility (CSR) activities. CEOs with strong place identities, heading firms located in their home birth counties, are associated with higher levels of CSR at their firms. The relation is more pronounced for CEOs with deeper home connections. CSR activities by home CEOs are associated with significant increases in firm value. The effect persists after controlling for corporate governance metrics. Additionally, home CEOs do not appear to extract private benefits, either directly or indirectly, from these activities. Overall, non-monetary emotional place identity channels appear to affect CSR.

Keywords: Corporate social responsibility, CEOs, home bias, psychology, environment, community

JEL Classification: M14, G34, G39