CEO poverty experience and corporate environmental violations

Abstract

AbstractThis study explores the effect of chief executive officer (CEO) early‐life poverty experiences on firms' environmental violations. By integrating upper echelon theory and imprinting theory, we argue that CEOs' poverty imprints cause them to re‐evaluate their life priorities and channel managerial attention to their firms' economic goal domains, thereby encouraging CEOs to pursue firm economic performance rather than environmental responsibility. Consequently, they manifest a tendency to engage in environmental violations. An analysis of a large sample of publicly listed Chinese firms during the period 2008–2020 provides strong support for the positive effect of CEO poverty experience on corporate environmental violations. This poverty imprint effect is weaker for CEOs with higher education backgrounds but stronger for firms with greater horizontal performance gaps. Our results survived an endogeneity check and various robustness tests.