Double standards? The adverse impact of chairperson hometown ties on corporate green innovation

Nianhang Xu, Min Li, Rongrong Xie and Kam C. Chan

Journal of Corporate Finance, 2024, vol. 88, issue C

Abstract: Using a sample of Chinese firms from 2000 to 2018, we document that hometown firms (firms with hometown chairpersons) engage in less green innovation than non-hometown firms. Evidence suggests that local stakeholders offer hometown chairpersons more protection from environmental consequences than non-hometown chairpersons. We identify two possible mechanisms: government patronage and accommodation by local supply chain partners. Furthermore, we find that the double standards are alleviated with insignificant difference in corporate green innovation when non-hometown chairpersons marry hometown spouses or build local political relationships. Additional analyses suggest that (1) the double standards drive hometown firms to emit more pollutants than non-hometown firms, (2) when a firm is under government scrutiny for environmental issues, located in the city with severe air pollution, or in heavily polluting industries, the adverse effect of a chairperson's hometown on green innovation is minimal, and (3) our findings on green innovation also extend to a decrease in the number of pollutant treatment facilities and treatment capacity in a firm.

Keywords: Hometown chairperson; Green innovation; Double standards; Environment protection; Social capital (search for similar items in EconPapers)
JEL-codes: G3 O3 Q5 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:88:y:2024:i:c:s0929119924001020

DOI: 10.1016/j.jcorpfin.2024.102640

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