Local Boy Does Good: The Effect of Home CEOs on Firm CSR

Home CEOs, CEOs heading firms located in their home birth counties, conduct greater levels of corporate socially responsible (CSR) activities than non-home CEOs. The CSR activities by these home CEOs increase firm value. Following CSR activity at firms managed by home CEOs, local employees are more productive, the firms earn higher sales growth, and charge higher markups than firms run by non-home CEOs. Strikingly, only firms conducting CSR activities with home CEOs earn higher stock returns during the 2008-2009 financial crisis and the COVID-19 pandemic periods, respectively. Overall, our results suggest that engaging in CSR will not necessarily increase levels of social trust and firm value. The social identity of the CEO also matters.