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CEO Hometown Preference in Corporate Environmental Policies

Author

Listed:
  • Wei Li

    (Department of Accountancy, City University of Hong Kong, Hong Kong)

  • Qiping Xu

    (Gies College of Business, University of Illinois Urbana-Champaign, Urbana, Illinois 61820)

  • Qifei Zhu

    (National University of Singapore Business School, National University of Singapore, Singapore 639798)

Abstract

We exploit within-firm variations in plant-level toxic releases to examine the effect of managerial hometown preference on corporate environmental policies. We find that pollution levels are about 30% lower for plants located near chief executive officers’ (CEOs’) hometowns. This reduction is achieved through resource-intensive pollution control efforts, including source reduction and waste management activities. Analyses using CEO turnover provide causal inferences. Local residents benefit from CEO hometown pollution reduction as localities hosting more hometown plants experience improved environmental conditions and better residential health outcomes. On the other hand, some evidence suggests that CEOs’ hometown preference is related to agency frictions. Overall, our findings reveal the impact of CEOs’ personal motivations on corporate pollution dynamics and their consequential effects on the well-being of local communities.

Suggested Citation

  • Wei Li & Qiping Xu & Qifei Zhu, 2025. "CEO Hometown Preference in Corporate Environmental Policies," Management Science, INFORMS, vol. 71(10), pages 8783-8806, October.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:10:p:8783-8806
    DOI: 10.1287/mnsc.2022.02560
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