East, West, Home's Best: Do Local CEOs Behave Less Myopically?

• 成果类型: Article
• 署名作者: Lai, Shufang; Li, Zengquan; Yang, Yong George
• 署名单位: Southern University of Science & Technology; Shanghai University of Finance & Economics; Chinese University of Hong Kong
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52555
• 发表日期: 2020
• 页码: 227-255
• 关键词: PLACE ATTACHMENT; corporate; incentives; performance; FIRMS; debt; LIFE; TRANSPARENCY; CONTRACTS; community

摘要

We test whether CEOs working near their childhood homes are less likely than nonlocal CEOs to make myopic decisions. Place attachment theories suggest that people develop mutual caretaking relationships with their birthplaces. Also, executive labor markets face less information asymmetry about local CEOs, resulting in lower pressure on local CEOs for quick profits. Consistent with the prediction, we find that local CEOs are less likely to cut R&D expenditures for beating analyst forecasts or avoiding earnings decreases. In their last year of office, local CEOs are significantly less likely to cut R&D than nonlocal CEOs. The CEO locality effect is stronger when more local business interests are embedded in the firm and when the residents of the CEO's birth state have stronger local social bonds. Local CEOs' longer horizons are consistently manifested in their other decisions, such as paying more state tax and being more socially responsible in business operation.