Do hometown CEOs treat their employees better? Evidence from China

Abstract

Employees are the most fundamental stakeholders in business operations, and safeguarding their rights and interests is an important manifestation of a firm's level of social responsibility. Little research has addressed whether hometown CEOs can affect employee‐related CSR (E‐CSR) and how the corporate ownership and regional economic development would moderate such an impact. Using an informal institutional perspective, we extend the literature on CEO characteristics by exploring the factors leading to employee welfare. Analysing a panel dataset of 1018 firms from Chinese A‐share listed companies between 2008 and 2020, we find a positive relationship between hometown identity and E‐CSR. Further research indicates that the effect is more pronounced in state‐owned enterprises and underdeveloped areas. Against the backdrop of weak labour protection in China's labour market, we contribute to research on informal institutions and employee benefits in pursuing harmonious labour relations.