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CEO hometown identity and cash hoarding

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  • Song, Chen

Abstract

This paper examines the effects of CEO hometown identity on corporate cash hoarding. We provide robust evidence that firms led by hometown CEOs tend to hoard significantly less cash. This effect is weaker in state-owned enterprises (SOEs) and firms with fierce competition, which may be attributed to the strong government intervention over SOEs and the external pressures of competitive markets. Further analysis reveals that CEO hometown identity reduces corporate cash hoarding by weakening both precautionary- and agency-driven motives. The findings suggest that CEO hometown identity serves as an effective informal corporate governance mechanism for corporate cash management. Our results remain robust across various robustness tests, including alternative proxies for corporate cash hoarding, the instrumental variables approach, the difference-in-differences method, the propensity score matching technique, the placebo test, and the Heckman two-step selection model.

Suggested Citation

  • Song, Chen, 2026. "CEO hometown identity and cash hoarding," Pacific-Basin Finance Journal, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:pacfin:v:97:y:2026:i:c:s0927538x26000442
    DOI: 10.1016/j.pacfin.2026.103098
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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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