Does Managers’ Early Policy-Induced Adversity Affect Corporate ESG Performance? Evidence From China Sent-Down Youth Movement

52 Pages Posted: 21 Sep 2022

See all articles by He Wang

He Wang

Southern University of Science and Technology

Wenquan Li

University of Queensland - Business School

Rong Wang

University of Queensland

George J. Jiang

Washington State University

Date Written: August 25, 2022

Abstract

Despite an extensive literature based on upper echelons theory and imprinting theory explores how top managers’ previous experience influence corporate behaviors, little is known about the impact of managers’ early policy-induced adversity experience on corporate social responsibility. This paper examines the relationship between top manager and board members experienced early policy-induced adversity and corporate ESG performance. Using top managers and board members' early-life "sent-down youth" experiences from 1957 to 1976 as a quasi-natural experiment, we find that top managers and board members experienced policy-induced adversity are associated with lower corporate ESG performance. Our evidences further shows that board members have more significantly negative impact on ESG performance than top managers. The results are stronger in the upper executives who works in state-owned enterprises (SOE). Additional tests show that firms governed by early policy-induced adversity experienced managers have higher market value as measured by Tobin's Q. Our findings are consistent with the view that ESG investment is a manifestation of agency problems.

Keywords: Upper echelons theory, ESG performance, Early-life experience, Agency problem, Sent-down youth movement

Suggested Citation

Wang, He and Li, Wenquan and Wang, Rong and Jiang, George, Does Managers’ Early Policy-Induced Adversity Affect Corporate ESG Performance? Evidence From China Sent-Down Youth Movement (August 25, 2022). Available at SSRN: https://ssrn.com/abstract=4199908 or http://dx.doi.org/10.2139/ssrn.4199908

He Wang

Southern University of Science and Technology ( email )

1088 Xueyuan Avenue
Shenzhen, Guangdong 518055
China

Wenquan Li

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

Rong Wang

University of Queensland ( email )

Australia
0493412066 (Phone)

George Jiang (Contact Author)

Washington State University ( email )

Department of Finance and Management Science
Carson College of Business
Pullman, WA 99-4746164
United States
509-3354474 (Phone)

HOME PAGE: http://directory.business.wsu.edu/bio.html?username=george.jiang

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