Indelible imprint: CEOs’ poverty experience and corporate labor income share

This study examines the impact of CEOs’ poverty experiences on firms’ labor income share. Using a manually compiled dataset that matches the birthplaces of CEOs with poverty-stricken counties in China, we find that firms led by CEOs with poverty experience have a considerably higher labor income share. This effect is stronger for firms located in CEOs’ hometowns, labor-intensive firms, and CEOs with higher educational attainment. Further analysis reveals that CEO poverty experience increases labor income share through self-restraint in expenses (reducing discretionary managerial costs) and investment in employees (enhancing wages, benefits, and training programs). Our findings support imprinting theory and distributive justice theory, suggesting that early-life adversity leaves a lasting effect on CEOs’ decision-making, thereby influencing corporate resource allocation and employee welfare policies.