Market segmentation is common across various sectors, particularly evident in China's electricity market. Meanwhile, officials form a variety of geographic networks due to their innate backgrounds ...and acquired social connections. An extensive body of studies providing insights into the important role of officials' network ties in resource allocation, but little attention has been paid to the impact of this dynamic process on energy resources. Given that energy play a significant role in shaping economic growth, our study complements this body of literature by examining how leaders with hometown ties impact inter-provincial electricity trade in China using a gravity model. The gravity model, which has become the traditional framework for estimating the determinants of trade flows, is applicable to the province pairs data structure in our study. Using data on provincial officials' hometown and inter-provincial electricity transactions for 30 provinces in China between 2007 and 2019, the results reveal that a leader whose hometown is i and current jurisdiction is j significantly increases the probability of electricity flowing from i to j, corresponding to a 53.73 % increase, which indicates that they implement a weaker market segmentation on their hometown. Moreover, the results reveal that this effect only occurs in a leader's tenure, and is particularly pronounced when a leader's hometown and current jurisdiction are on the same regional grid, or at least adjacent to each other, or when the current jurisdiction has higher power load levels. The results of mechanism analysis reveal that China's immature electricity market drives officials to leverage hometown ties for market integration, rather than promotion or rent-seeking. Our findings contribute to a deeper understanding of the broader impact of officials' personal ties. It also provides a valuable insight into the factors facilitating the integration of China's electricity market.
•A gravity model is used to explore how leaders' hometown ties affect power trade.•Hometown ties increase power trade between a leader's hometown and current jurisdiction.•Hometown ties effects show a temporal, spatial and power load heterogeneity.•An immature power market drives officials to utilize hometown ties for market integration.
While prior conceptualizations acknowledge that CEOs' psychological traits influence their decision making and organizational outcomes, it remains unclear whether and how hometown identity as an ...important character of CEOs affects corporate misconduct. By integrating social identity theory with fraud triangle framework, we theorize and find evidence that CEO hometown identity significantly constrains corporate misconduct, and this effect is more pronounced in subnational regions with deeper influence of Confucian and clan cultures. We also reveal that the deterrent effect of CEO hometown identity weakens in regions with higher-quality legal and economic institutions and in firms subjected to more rigorous oversight mechanisms. These findings withstand a range of robustness checks. Additional analyses show that the influence of CEO hometown identity extends to various types of corporate misconduct and the reinforcing effect of local cultures applies across different types of misconduct. Collectively, our findings further the understanding of how CEO hometown identity and its interactions with institutions and oversight mechanisms influence corporate misconduct.
•CEO hometown identity significantly constrains corporate misconduct.•The focal effect is more pronounced in subnational regions with deeper influence of Confucian and clan cultures.•The focal effect weakens in regions with higher-quality legal and economic institutions and in firms under stricter oversight mechanisms.•The effect of CEO hometown identity extends to various types of corporate misconduct, and the role of local cultures applies across different types of it.
While prior conceptualizations acknowledge that CEOs’ psychological traits influence firm outcomes, it remains unknown whether and how hometown identity as an important character of CEOs affects ...corporate risk-taking. Drawn upon place identity theory, our study investigates whether CEO hometown identity mitigates or encourages firms' risk-taking. Using a sample of Chinese listed firms between 2008 and 2020, we show that CEO hometown identity significantly reduces corporate risk-taking, and this finding holds after a battery of robustness checks. Our cross-sectional analyses further reveals that this effect is stronger for female CEOs but weaker for CEOs with international experiences. Additionally, we demonstrate that the reduction in firm risk-taking is achieved through lower financial leverage, enhanced investment efficiency, and reduced earnings management. Collectively, by highlighting the importance of CEO hometown identity, our study furthers the understanding of how CEO psychological traits influence corporate risk-taking.
•CEO hometown identity significantly lowers corporate risk-taking.•The focal effect is more pronounced for female CEOs, but less so for CEOs with foreign experiences.•The decline in firm risk-taking is realized through reduced financial leverage, improved investment efficiency, and decreased earnings management.•The study contributes to a more nuanced understanding of the dynamics of CEO traits in shaping firm risk-taking.
The environmental, social, and governance (ESG) performance is a vital pursuit of firms’ strategy and has caused substantial influences on firms’ behavior and outcomes. Therefore, exploring how to ...facilitate the firms’ ESG performance is necessary. This paper examines the role of CEOs’ hometown identity in facilitating firm’s ESG performance. Based on a sample of Chinese listed firms during 2010–2018, we compare the ESG performance of firms with hometown CEO with that of firms without hometown CEO and find that CEOs’ hometown identity is associated with significantly higher ESG performance. The benchmark results still hold after instrumental variable regression, placebo test, propensity score matching, lagging, and altering the measurement of CEOs’ hometown identity. Additional analysis shows that CEOs’ hometown identity exerts a more prominent positive effect on ESG performance among firms with higher financing constraints and SOEs. Our findings reveal a bright side of CEOs’ hometown identity: it facilitates ESG performance. Therefore, this paper’s conclusion sheds new light on the bright side of CEOs’ hometown identity from the perspective of firms’ ESG performance and provides insights into how to improve ESG performance.
Drawn on the upper echelons theory, this study investigates how chief executive officer (CEO) hometown identity drives firm green innovation. We propose that CEO hometown identity has a positive ...impact on a firm's green innovation performance. Furthermore, we explore the moderating role of managerial discretion determined by organizational and environmental factors (i.e., institutional ownership and market complexity). We propose that institutional ownership negatively moderates the positive relationship between CEO hometown identity and green innovation, but market complexity plays a positive moderating role. Using Chinese publicly listed firms from 2002 to 2016 in heavily polluting industries, our findings support these hypotheses. Our research contributes to the upper echelons theory and corporate social responsibility literature and has substantial practical implications.
•CEO hometown identity significantly curbs default risk.•This effect is realized through hometown CEOs’ reputation concern and capabilities to alleviate financial constraints.•This study highlights ...the positive role of CEO hometown identity from debtholders’ perspectives and offers valuable practical implications on how to control default risk.
Motivated by the understudied role of CEO hometown identity in the credit market, our study, grounded in place identity theory, examines whether CEO hometown identity lowers or raises firms’ default risk. Our results, based on a sample of listed Chinese firms from 2008 to 2020, show that CEO hometown identity significantly curbs default risk; this finding holds after a battery of robustness tests that address endogeneity concerns. Further analyses reveal that this effect is realized through hometown CEOs’ reputation concern and capabilities to alleviate financial constraints. Overall, our study highlights the positive role of CEO hometown identity from debtholders’ perspectives and offers valuable practical implications on how to control default risk.
This study documents the effect of CEO's identification with their hometown on corporate social responsibility (CSR). We propose that firms headquartered in their CEOs’ hometowns tend to do more CSR. ...This is because identification with their hometown activates CEOs’ altruistic tendency to be more prosocial and makes them more likely to have long-term goals, both of which are compatible with the nature of CSR. This hometown identity effect is stronger when the firm is more locally connected and is weaker when the firm is located in a region with more diverse dialects. Analyzing a large sample of publicly listed Chinese firms for 2009–2016, we found strong support for our predictions. The robustness of our findings is confirmed by a field survey, a difference-in-differences (DID) approach, the Heckman two-stage model, the impact threshold of confounding variables (ITCV), and alternative measures of CSR and CEO hometown identity.
This study examines how consumers’ hometown orientation affects their preferences for food products. Regarding food products, consumers may prefer products from their hometown over those produced in ...other domestic areas, among other factors. We consider that due to population migration, a consumers’ current or local place of residence may not necessarily be their hometown. After defining the hometown effect with a framework of consumer willingness to pay, we apply a double-bounded dichotomous choice contingent valuation method to value the hometown effect on a rice product, based on a consumer survey conducted in Japan. This study reveals that consumers’ hometown orientation significantly affects their preferences for the rice product produced in their hometown. The magnitude of the hometown effect for the product is estimated at 48 JPY (0.44 USD) per kg in terms of consumer willingness to pay. The premium rate of the hometown effect compared with the price of the base product is 12.4%. Food labels indicating more detailed region of origin information could be a potential marketing strategy to appeal to consumers from that region but currently living in other areas.
ABSTRACT This study examines whether politicians exhibit hometown favoritism in assigning preferential corporate income tax rates. We find that firms with hometown connections to incumbent provincial ...leaders experience favorable tax treatment. This effect is more pronounced when those leaders have strong hometown preferences and weaker when they have a strong incentive to seek promotion, suggesting that social incentives are the primary drivers of the effects on corporate tax benefits of hometown favoritism by politicians. Moreover, this effect is intensified when members of senior management have personal connections with the provincial leader. The mechanism test reveals that the provincial governments tend to qualify connected firms for preferential tax policies under their jurisdictions. Overall, our results suggest that hometown favoritism by politicians promotes tax benefits for business entities. Data Availability: Data are available from the public sources cited in the text. JEL Classification: H26; H71; M48.
This paper investigates the association between hometown landholdings and rural migrants’ intentions to integrate in their destination societies in Chinese cities. We argue that hometown landholding ...affects rural migrants’ integration intention through the asset effect, security effect and emotional attachment effect. The empirical work based on a large national micro-level data extracted from the 2017 China Migrants Dynamic Survey (CMDS) shows that, rural migrants who possess contracted farmland but no homestead land in hometown have the highest level of integration intention, followed by those without any land, those with both types of land, and finally those with homestead land only. Such findings suggest that the possession of farmland tends to boost rural migrants’ integration intention while the possession of homestead land appears to have a depressing effect. However, the depressing effect of homestead land on average dominates the boosting effect of farmland. Further analysis shows that, the positive effect of farmland is strengthened when the asset function of contracted farmland is strong, while the negative effect of homestead land is reduced when migrants have purchased housing in the host cities. The paper also identities the mediating effect of local social security insurance in the impacts of hometown landholding on rural migrants’ integration intentions as well as the heterogeneity of such impacts across age-cohorts and subgroups associated with different connection levels to hometowns.
•Hometown landholding affects Chinese rural migrants’ integration intentions in the host cities.•This impact is through asset effect, security effect and emotional attachment effect.•Rural migrants possessing contracted farmland but no housing land have strongest integration intentions.•Those without any land, with both types of land, and with housing land only have lower integration intentions.•Farmland tends to boost rural migrants’ integration intention while housing land depresses.
