The Chairman’s Rural Origin and Short-Term Expenditures in China

Weiyu Zhang, Xinyue Li, Shaowei Liu and Jong-wook Kwon ()
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Weiyu Zhang: Department of Business Administration, College of Business Administration, Kangwon National University, Chuncheon-si 24341, Gangwon-do, Republic of Korea
Xinyue Li: Department of Business Administration, College of Business Administration, Kangwon National University, Chuncheon-si 24341, Gangwon-do, Republic of Korea
Shaowei Liu: Department of Journalism & Mass Communication, College of Social Sciences, Kangwon National University, Chuncheon-si 24341, Gangwon-do, Republic of Korea
Jong-wook Kwon: Department of Business Administration, College of Business Administration, Kangwon National University, Chuncheon-si 24341, Gangwon-do, Republic of Korea

Sustainability, 2023, vol. 15, issue 18, 1-20

Abstract: This study employs imprinting theory, cultural capital theory, and upper echelon theory to investigate the influence of the rural upbringing of board chairpersons on corporate R&D (Research and Development) and advertising expenditures, as well as the moderating impact of the chairperson’s marketing and financial experience in the competitive market environment. A binary dataset was compiled, comprising 1058 Chinese listed companies and 5434 board chairpersons as samples. Through multiple regression analysis, we established a link between board chairpersons’ rural backgrounds and short-term marketing expenditures. The findings indicate that chairpersons’ rural upbringing negatively affects R&D and advertising expenditures. Additionally, marketing experience exerts a negative moderating influence on R&D expenditure, whereas financial experience does not exhibit a significant moderating effect. Furthermore, the market growth rate positively moderates the relationship between the chairman’s rural background and R&D as well as advertising expenditures. This suggests that the external competitive environment may attenuate the conservative imprint associated with a rural upbringing. This study departs from the conventional paradigm of understanding short-term spending based solely on economic incentives, incorporating non-economic factors rooted in individual cognition and values. It introduces a fresh perspective to the examination of myopic spending and contributes to the exploration of how birthplace impacts corporate decision making. These findings offer a deeper comprehension of how the background of chairpersons influences firms’ decision-making behavior, providing valuable insights for top executives in crafting strategies and making informed decisions.

Keywords: myopic spending; rural background; chairman; imprint; work experience; cultural capital (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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