CEO Locality and Corporate Social Responsibility

Abstract

AbstractWe explore the geography of corporate social responsibility (CSR) by examining the relationship between chief executive officer (CEO) locality (i.e. whether CEOs work near their hometowns) and CSR performance. The CSR score of firms with local CEOs exceeds that of firms without local CEOs by an amount equivalent to 11.1% of the sample mean CSR score. Further, the effect of CEO locality on CSR is more evident for firms headquartered in regions with high social capital, exhibiting a long‐term orientation, practising good corporate governance, or led by CEOs with early‐life disaster experiences or political connections. Additional analysis reveals that local CEOs emphasize CSR initiatives that boost local stakeholder welfare, strengthening the positive connection between CSR and firm performance. Our findings imply that CEO locality enhances CSR because local CEOs’ familiarity with and strong ties to their hometown regions align with CSR's emphasis on local engagement.