Born to behave: Home CEOs and financial misconduct*

Zicheng Lei; Dimitris Petmezas; P. Raghavendra Rau; Chen Yang

doi:10.1007/s11142-025-09870-y

Born to behave: Home CEOs and financial misconduct*

Zicheng Lei^1,2; Dimitris Petmezas³; P. Raghavendra Rau⁴; Chen Yang^5,6

¹ King's College London · ² King's College School · ³ Durham University · ⁴ University of Cambridge · ⁵ Adam Smith Institute · ⁶ University of Glasgow

Review of Accounting Studies 2025 open access

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.

DOI: 10.1007/s11142-025-09870-y
Volume: 30 (2)
Pages: 1309-1354
Language: en
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