Doing right at home: Do hometown CEOs curb corporate misconduct?

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.