No place like home: Do local CEOs invest in labor more efficiently?

IF 4.6 3区管理学 Q1 BUSINESS Corporate Governance-An International Review Pub Date : 2023-08-07 DOI:10.1111/corg.12553

Yan Tong, Yuan Tian, Zhangfan Cao

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Abstract

Research question/issue

This study investigates whether local CEOs make more efficient investment decisions in labor.

Research findings/insights

We find that firms hiring local CEOs are associated with lower deviations of labor investment from the level justified by economic fundamentals, that is, higher labor investment efficiency. More importantly, we explore the role of information advantage, corporate governance, and CEO cultural background in shaping the relationship. We find the effect of CEO locality is more pronounced when firms have higher levels of local business integration, poorer corporate governance, and higher agency costs. Moreover, the impact of CEO locality is stronger when CEOs' hometowns have stronger unselfishness culture, patriotism culture, and Confucian culture. Our results are robust to a battery of endogeneity tests and robustness checks.

Theoretical/academic implications

Our study reveals that CEO locality, as one of the idiosyncratic top executive styles, can hinder managers from myopic behavior by investing more efficiently in labor, as a key factor of production and a major internal stakeholder, for a firm's success.

Practitioner/policy implications

Given human capital is considered the primary source of firms' competitive advantage, our study provides useful insights and managerial implications for firms to consider the impact of the idiosyncratic top executive styles as one of the noncontractual factors on firms' employment decisions.

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没有地方比得上家乡本地首席执行官对劳动力的投资是否更有效率？

研究问题本研究探讨本地首席执行官是否会做出更有效的劳动力投资决策。研究结果/见解我们发现，聘用本土首席执行官的公司与劳动力投资偏离经济基本面合理水平的程度较低相关，即劳动力投资效率较高。更重要的是，我们探讨了信息优势、公司治理和首席执行官文化背景在形成这种关系中的作用。我们发现，当企业具有较高的本地业务整合水平、较差的公司治理和较高的代理成本时，首席执行官本地化的影响更为明显。此外，当 CEO 的家乡具有较强的大公无私文化、爱国主义文化和儒家文化时，CEO 地域性的影响会更大。我们的结果经得起一系列内生性检验和稳健性检验。理论/学术意义我们的研究揭示了 CEO 地域性作为特异的高层管理风格之一，可以通过更有效地投资于劳动力这一关键生产要素和公司成功的主要内部利益相关者来阻碍管理者的近视行为。对实践者/政策的启示鉴于人力资本被认为是企业竞争优势的主要来源，我们的研究为企业提供了有益的见解和管理启示，有助于企业考虑作为非契约因素之一的特异性高层管理风格对企业雇佣决策的影响。

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来源期刊

Corporate Governance-An International Review Multiple-

CiteScore

7.00

自引率

11.30%

发文量

期刊介绍： The mission of Corporate Governance: An International Review is to publish cutting-edge international business research on the phenomena of comparative corporate governance throughout the global economy. Our ultimate goal is a rigorous and relevant global theory of corporate governance. We define corporate governance broadly as the exercise of power over corporate entities so as to increase the value provided to the organization"s various stakeholders, as well as making those stakeholders accountable for acting responsibly with regard to the protection, generation, and distribution of wealth invested in the firm. Because of this broad conceptualization, a wide variety of academic disciplines can contribute to our understanding.