Born to behave: Home CEOs and financial misconduct*

Zicheng Lei (), Dimitris Petmezas (), P. Raghavendra Rau () and Chen Yang ()
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Zicheng Lei: King’s College London
Dimitris Petmezas: Durham University Business School, Durham University
P. Raghavendra Rau: University of Cambridge
Chen Yang: University of Glasgow

Review of Accounting Studies, 2025, vol. 30, issue 2, No 8, 1309-1354

Abstract: Abstract We examine the association between CEO birthplace proximity and financial misconduct. We find that CEOs managing firms near their birthplaces (home CEOs) are associated with less financial misconduct compared to other CEOs. This association is not attributable to differences in corporate governance. The relationship strengthens in areas with a strong local investment presence and greater religious commitment as well as among CEOs with longer tenures in their home state. Our findings are robust to addressing potential selection and omitted variable biases as well as to conducting multiple robustness tests, including analyses of involuntary CEO changes and headquarters relocations. We also find a similar association for CFOs, with firms employing home CFOs exhibiting less financial misconduct.

Keywords: CEO reputational capital; Birthplace identity; Financial misconduct; Corporate governance; Local investors (search for similar items in EconPapers)
JEL-codes: G32 G41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11142-025-09870-y

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