Do local CEOs commit less fraud? Evidence from Chinese listed firms

ABSTRACT

This paper investigates whether CEOs working near their birthplace (i.e. local CEOs) commit less fraud. Using data of Chinese listed firms, where local social network is important for business, we find that local CEOs are associated with less fraud commitment. Cross-sectional analyses show that the inhibitory effect is weakened when the CEOs have poverty or oversea experiences. Such impact is more pronounced when the firms are owned by non-state owners or have weaker internal control.

KEYWORDS:

• Local CEO
• corporate fraud commitment
• place attachment
• China

JEL CLASSIFICATION:

• G34
• G39

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Due to space limitation, the tables for robustness tests are not reported in the paper, which are available upon request.

Additional information

Funding

The work was supported by the Ministry of Education of Humanities and Social Science Project [2018JJ3087,20YJA630035]; National Natural Science Foundation of China [71972068, 71602053]; Fundamental Research Funds for the Central Universities [SYL2020ZX014]