Social Identity or Social Capital: Local CEOS and Corporate ESG Performance

25 Pages Posted: 24 Aug 2024

See all articles by Shoufu Yang

Shoufu Yang

Southwestern University of Finance and Economics (SWUFE) - School of Management Science and Engineering

Dongmin Kong

School of Economics, Huazhong University of Science and Technology

Jiaqiong He

Sun Yat-sen University (SYSU) - School of Business

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Abstract

Using data of 1,807 Chinese listed private firms spanning 2010 to 2021, we investigate the impact of local CEOs on corporate environmental, social and corporate governance (ESG) performance and its mechanisms from the dual perspectives of social identity and social capital. We also empirically identify the differences between ESG and corporate social responsibility (CSR) by examing how local CEOs respond differently to ESG and CSR in different scenarios. We find that firms whose CEOs’ birthplace is located in the same city as the location of their corporate headquarters have better ESG performance. Mechanism analysis indicates that local CEOs enhance corporate ESG performance due to stronger hometown identity rather than social capital. Further analysis shows that when companies face greater financing constraints and macroeconomic uncertainty, local CEOs continue to prioritize ESG but are no longer actively engaged in CSR, highlighting the distinct approaches companies take toward ESG and CSR.

Keywords: ESG, Informal institutions, Hometown identity, Social capital, CSR

Suggested Citation

Yang, Shoufu and Kong, Dongmin and He, Jiaqiong, Social Identity or Social Capital: Local CEOS and Corporate ESG Performance. Available at SSRN: https://ssrn.com/abstract=4935600 or http://dx.doi.org/10.2139/ssrn.4935600

Shoufu Yang

Southwestern University of Finance and Economics (SWUFE) - School of Management Science and Engineering ( email )

Dongmin Kong

School of Economics, Huazhong University of Science and Technology ( email )

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Jiaqiong He (Contact Author)

Sun Yat-sen University (SYSU) - School of Business ( email )

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