Skip to main content
SpringerLink
Log in

Hometown Ties and Favoritism in Chinese Corporations: Evidence from CEO Dismissals and Corporate Social Responsibility

  • Original Paper
  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

This paper provides a systematic analysis of how hometown ties, the most common and distinct bases for interpersonal ties to build upon in China, could influence corporate governance in Chinese corporations by focusing on its impact on CEO dismissals and corporate social responsibility. We find that hometown ties between CEOs and board chairs reduce the likelihood of CEO dismissals and that the negative relationship between firm performance and CEO dismissals is weaker for hometown-connected CEOs in locally administered state-owned enterprises, for inside CEOs, for firms located outside board chairs’ hometowns, and for firms operating in regions with low social trust. Moreover, we find consistent evidence that hometown ties affect Chinese firms’ engagement in corporate social responsibility. Our study highlights the important role of hometown ties in Chinese relationship-based corporate governance. It also advances a normative ethical assessment of hometown-based favoritism by highlighting its distinct dynamics and impacts on focal actors and the third parties in specific contexts of actions.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. The endogenous treatment effect model is a variation of the Heckman selection model and is used to estimate a regression model with an endogenous binary treatment variable (i.e., hometown ties in our case). The implementation is to use Stata command “etregress” (for detail, please refer to https://www.stata.com/manuals13/teetregress.pdf).

References

  • Adler, P. S., & Kwon, S. (2002). Social capital: Prospects for a new concept. Academy of Management Review, 27, 17–40.

    Article  Google Scholar 

  • Aguilera, R. V., & Jackson, G. (2003). The cross-national diversity of corporate governance: Dimensions and determinants. Academy of Management Review, 28, 447–465.

    Article  Google Scholar 

  • Alesina, A., & La Ferrara, E. (2000). Participation in heterogeneous communities. Quarterly Journal of Economics, 115(3), 847–904.

    Article  Google Scholar 

  • Barnea, A., & Rubin, A. (2010). Corporate social responsibility as a conflict between shareholders. Journal of Business Ethics, 97, 71–86.

    Article  Google Scholar 

  • Benmelech, E., & Frydman, C. (2015). Military CEOs. Journal of Financial Economics, 117(1), 43–59.

    Article  Google Scholar 

  • Bian, Y. (1997). Bring strong ties back in: Indirect ties, network bridges, and job searchers in China. American Sociological Review, 62, 366–385.

    Article  Google Scholar 

  • Blau, P. M. (1964). Exchange and Power in Social Life. New York: Wiley.

    Google Scholar 

  • Boeker, W. (1992). Power and managerial dismissal: Scapegoating at the top. Administrative Science Quarterly, 37(3), 400–421.

    Article  Google Scholar 

  • Boeker, W., & Goodstein, J. (1993). Performance and successor choice: The moderating effects of governance and ownership. Academy of Management Journal, 36, 172–186.

    Article  Google Scholar 

  • Brickley, J. A. (2003). Empirical research on CEO turnover and firm-performance: A discussion. Journal of Accounting and Economics, 36(1–3), 227–233.

    Article  Google Scholar 

  • Burt, R. S. (1997). The contingent value of social capital. Administrative Science Quarterly, 42, 339–365.

    Article  Google Scholar 

  • Cannella, A. A., & Lubatkin, M. (1993). Succession as a sociopolitical process: Internal impediments to outsider selection. Academy of Management Journal, 36, 763–793.

    Article  Google Scholar 

  • Cespa, G., & Cestone, G. (2007). Corporate social responsibility and managerial entrenchment. Journal of Economics and Management Strategy, 16, 741–771.

    Google Scholar 

  • Chang, E., & Wong, S. (2009). Governance with multiple objectives: Evidence from top executive turnover in China. Journal of Corporate Finance, 15, 230–244.

    Article  Google Scholar 

  • Chen, C., Chen, X., & Huang, S. (2013). Chinese Guanxi: An integrative review and new directions for future research. Management and Organization Review, 9(1), 167–207.

    Article  Google Scholar 

  • Chen, C. C., Chen, Y. R., & Xin, K. R. (2004). Guanxi practices and trust in management: A procedural justice perspective. Organization Science, 15(2), 200–209.

    Article  Google Scholar 

  • Chen, S., Sun, Z., Tang, S., & Wu, D. (2011). Government intervention and investment efficiency: Evidence from China. Journal of Corporate Finance, 17(2), 259–271.

    Article  Google Scholar 

  • Chin, M. K., Hambrick, D. C., & Treviño, L. K. (2013). Political ideologies of CEOs: The influence of executives’ values on corporate social responsibility. Administrative Science Quarterly, 58(2), 197–232.

    Article  Google Scholar 

  • Chung, C. N., & Luo, X. (2008). Human agents, contexts, and institutional change: The decline of family in the leadership of business groups. Organization Science, 19(1), 124–142.

    Article  Google Scholar 

  • Coleman, J. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94(Supplement), 95–120.

    Article  Google Scholar 

  • Coleman, J. (1990). Foundations of Social Theory. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Conyon, M., & He, L. (2012). CEO compensation and corporate governance in China. Corporate Governance: An International Review, 20, 575–592.

    Article  Google Scholar 

  • Cumming, D., Hou, W., & Lee, E. (2016). Business ethics and finance in Greater China: Synthesis and future directions in sustainability, CSR, and fraud. Journal of Business Ethics, 138, 601–626.

    Article  Google Scholar 

  • Dalton, D. R., & Kesner, I. F. (1985). Organizational performance as an antecedent of inside/outside chief executive succession: An empirical assessment. Academy of Management Journal, 28, 749–762.

    Article  Google Scholar 

  • Damaraju, N. L., & Makhija, A. K. (2018). The role of social proximity in professional CEO appointments: Evidence from caste/religion-based hiring of CEOs in India. Strategic Management Journal, 39, 2051–2074.

    Article  Google Scholar 

  • Douw, L. M. (1999). Introduction. In L. M. Doue, C. Hurang, & R. M. Godley (Eds.), Qiaoxiang ties, multidisciplinary approaches to “cultural capitalism” in South China (pp. 3–22). Kegan Paul International: London/New York.

    Google Scholar 

  • Dunfee, T. W. (2008). Stakeholder Theory – Managing Corporate Social Responsibility in a Multiple Actor Context. The Oxford Handbook of Corporate Social Responsibility, Chapter 15 (Oxford University Press, Oxford, UK), pp. 346–362.

  • Dunfee, T. W., & Warren, D. E. (2001). Is guanxi ethical? A normative analysis of doing business in China. Journal of Business Ethics, 32(3), 191–204.

    Article  Google Scholar 

  • El Ghoul, S., Guedhami, O., & Kim, Y. (2017). Country-level institutions, firm value, and the role of corporate social responsibility initiatives. Journal of International Business Studies, 48, 360–385.

    Article  Google Scholar 

  • El Ghoul, S., Guedhami, O., Nash, R., & Patel, A. (2019). New evidence on the role of the media in corporate social responsibility. Journal of Business Ethics, 154, 1051–1079.

    Article  Google Scholar 

  • Fan, J. P. H., Wong, T. J., & Zhang, T. (2007). Politically connected CEOs, corporate governance, and post-IPO performance of China’s newly partially privatized firms. Journal of Financial Economics, 84, 330–357.

    Article  Google Scholar 

  • Finkelstein, S., & Hambrick, D. C. (1996). Strategic Leadership: Top Executives and Their Effects on Organizations. Los Angeles: West.

    Google Scholar 

  • Fisman, R. J., Shi, J., Wang, Y., & Xu, R. (2018). Social ties and favoritism in Chinese science. Journal of Political Economy, 126(3), 1134–1171.

    Article  Google Scholar 

  • Fisman, R. J., Shi, J., Wang, Y., & Wu, W. (2019). Social ties and the selection of China’s political elite. American Economic Review, 110(6), 1752–1781.

    Article  Google Scholar 

  • Fiss, P. C., & Zajac, E. J. (2004). The diffusion of ideas over contested terrain: The (non)adoption of a shareholder value orientation among German firms. Administrative Science Quarterly, 49, 501–534.

    Article  Google Scholar 

  • Flammer, C. (2013). Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, 56(3), 758–781.

    Article  Google Scholar 

  • Flickinger, M., Wrage, M., Tuschke, A., & Bresser, R. (2016). How CEOs protect themselves against dismissal: A social status perspective. Strategic Management Journal, 37, 1107–1117.

    Article  Google Scholar 

  • Franklin, A., Qian, J., & Qian, M. (2005). Law, finance and economic growth in China. Journal of Financial Economics, 77, 57–116.

    Article  Google Scholar 

  • Fredrickson, J. W., Hambrick, D. C., & Baumrin, S. (1988). A model of CEO dismissal. Academy of Management Review, 13(2), 255–270.

    Article  Google Scholar 

  • Fukuyama, F. (1995). Trust: The Social Virtues and the Creation of Prosperity. New York: Free Press.

    Google Scholar 

  • Galaskiewicz, J., & Shatin, D. (1981). Leadership and networking among neighbourhood human service organizations. Administrative Science Quarterly, 26, 434–448.

    Article  Google Scholar 

  • Ge, Y., & Qiu, J. (2007). Financial development, bank discrimination and trade credit. Journal of Banking and Finance, 31, 513–530.

    Article  Google Scholar 

  • Gompers, P., Ishii, J., & Metrick, A. (2003). Corporate governance and equity prices. Quarterly Journal of Economics, 118(1), 107–156.

    Article  Google Scholar 

  • Gouldner, A. (1960). The norm of reciprocity: A preliminary statement. American Sociological Review, 25(2), 161–178.

    Article  Google Scholar 

  • Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91, 481–510.

    Article  Google Scholar 

  • Greenberg, J., & Mollick, E. (2017). Activist choice homophily and the crowdfunding of female founders. Administrative Science Quarterly, 62(2), 341–374.

    Article  Google Scholar 

  • Greiner, L., Cummings, T., & Bhambri, A. (2002). When new CEOs succeed and fail: 4-D theory of strategic transformation. Organizational Dynamics, 32(3), 1–17.

    Google Scholar 

  • Guiso, L., Sapienza, P., & Zingales, L. (2009). Cultural biases in economic exchanges. The Quarterly Journal of Economics, 124(3), 1095–1131.

    Article  Google Scholar 

  • Hamilton, G. G. (1996). Asian Business Networks. New York: Walter de Gruyter.

    Book  Google Scholar 

  • Harris, D., & Helfat, C. E. (1997). Specificity of CEO human capital and compensation. Strategic Management Journal, 18(11), 895–920.

    Article  Google Scholar 

  • Hemingway, A., & Maclagan, P. W. (2004). Managers’ personal values as drivers of corporate social responsibility. Journal of Business Ethics, 50, 33–44.

    Article  Google Scholar 

  • Hofstede, G., Hofstede, G., & Minkov, M. (2010). Cultures and Organizations: Software of the Mind (3rd ed.). New York: McGraw-Hill.

    Google Scholar 

  • Hoskisson, R. E., Eden, L., Lau, C. M., & Wright, M. (2000). Strategy in emerging economies. Academy of Management Journal, 43, 249–267.

    Article  Google Scholar 

  • Huang, Y. (2002). Selling China: Foreign investment during the reform era. Cambridge, New York: Cambridge University Press.

    Book  Google Scholar 

  • Hwang, B. H., & Kim, S. (2009). It pays to have friends. Journal of Financial Economics, 93(1), 138–158.

    Article  Google Scholar 

  • Hwang, K. K. (1987). Face and favor: The Chinese power game. American Journal of Sociology, 92, 944–974.

    Article  Google Scholar 

  • Jacobs, J. B. (1982). The concept of guanxi and local politics in a rural Chinese cultural setting. In S. Greenblatt, R. Wilson, & A. Wilson (Eds.), Social Interaction in Chinese Society (pp. 209–236). New York: Praeger Publisher.

    Google Scholar 

  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3, 305–350.

    Article  Google Scholar 

  • Jenter, D., & Kanaan, F. (2015). CEO turnover and relative performance evaluation. Journal of Finance, 70(5), 2155–2184.

    Article  Google Scholar 

  • Jetten, J., Schmitt, M. T., Branscombe, N. E., Garza, A. A., & Mewse, A. J. (2011). Group commitment in the face of discrimination: The role of legitimacy appraisals. European Journal of Social Psychology, 41, 116–126.

    Article  Google Scholar 

  • Jiang, X., Chen, C. C., & Shi, K. (2013). Favor in exchange for trust? The role of subordinates’ attribution of supervisory favors. Asia Pacific Journal of Management, 30, 513–536.

    Article  Google Scholar 

  • Jin, H., & Qian, Y. (1998). Public versus private ownership of firms: Evidence from rural China. Quarterly Journal of Economics, 113, 773–808.

    Article  Google Scholar 

  • Kao, E. H., Yeh, C., Wang, L., & Fung, H. (2018). The relationship between CSR and performance: Evidence in China. Pacific-Basin Finance Journal, 51, 155–170.

    Article  Google Scholar 

  • Kato, T., & Long, C. (2006a). CEO turnover, firm performance, and enterprise reform in China: Evidence from micro data. Journal of Comparative Economics, 34(4), 796–817.

    Article  Google Scholar 

  • Kato, T., & Long, C. (2006b). Executive turnover and firm performance in China. American Economic Review, 96(2), 363–367.

    Article  Google Scholar 

  • Kimberly, J., & Zajac, E. J. (1988). The dynamics of CEO-board relationships. In D. C. Hambrick (Ed.), The executive effect: Concepts and methods for studying top managers (pp. 179–204). Greenwich, CT: JAI Press.

    Google Scholar 

  • Khatri, N., Tsang, E. W. K., & Begley, T. M. (2006). Cronyism: A cross-cultural analysis. Journal of International Business Studies, 37(1), 61–75.

    Article  Google Scholar 

  • Kong D., Pan Y., Tian G.G., & P. Zhang. (2020). CEOs’ hometown connections and access to trade credit: Evidence from China. Journal of Corporate Finance, 62, [101574].

  • La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1997). Trust in large organizations. American Economic Review, 87, 333–338.

    Google Scholar 

  • Leana, C. R., & Rousseau, D. M. (2000). Relational wealth: The advantages of stability in a changing economy. New York: Oxford University Press.

    Google Scholar 

  • Li, W., & Zhang, R. (2010). Corporate social responsibility, ownership structure, and political interference: Evidence from China. Journal of Business Ethics, 96, 631–645.

    Article  Google Scholar 

  • Li, H., & Zhou, L. A. (2005). Political turnover and economic performance: The incentive role of personnel control in China. Journal of Public Economics, 89, 1743–1762.

    Article  Google Scholar 

  • Lin, J. Y., Cai, F., & Li, Z. (1998). Competition, policy burdens, and state-owned enterprise reform. American Economic Review, 88, 422–427.

    Google Scholar 

  • Lin, L. W. (2010). Corporate social responsibility in China: Window dressing or structural change? Berkeley Journal of International Law, 28(1), 64–100.

    Google Scholar 

  • Lin, K. J., Tan, J., Zhao, L., & Karim, K. (2015). In the name of charity: Political connections and strategic corporate social responsibility in a transition economy. Journal of Corporate Finance, 32, 327–346.

    Article  Google Scholar 

  • Lins, K., Servaes, H., & Tamayo, A. (2016). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. Journal of Finance, 72, 1785–1824.

    Article  Google Scholar 

  • Luo, X. R., Wang, D., & Zhang, J. (2017a). Whose call to answer: Institutional complexity and firms’ CSR Reporting. Academy of Management Journal, 60, 321–344.

    Article  Google Scholar 

  • Luo, J., Xiang, Y., & Zhu, R. (2017b). Military top executives and corporate philanthropy: Evidence from China. Asia Pacific Journal of Management, 34, 725–755.

    Article  Google Scholar 

  • Marquis, C., & Qian, C. (2014). Corporate social responsibility reporting in China: Symbol or substance? Organization Science, 25(1), 127–148.

    Article  Google Scholar 

  • McDonald, M., & Westphal, J. (2011). My brother’s keeper? CEO identification with the corporate elite, social support among CEOs, and leader effectiveness. Academy of Management Journal, 54, 661–693.

    Article  Google Scholar 

  • Mobrand, E. (2007). Mobilization or repression of migrants in urban China? Hometown networks, leadership, and lessons from international and historical comparisons. Journal of Comparative Asian Development, 6(2), 337–361.

    Article  Google Scholar 

  • Mollica, K. A., Gary, B., & Treviño, L. K. (2003). Racial homophily and its persistence in newcomers’ social networks. Organization Science, 14(2), 123–136.

    Article  Google Scholar 

  • Morck, R., Wolfenzon, D., & Yeung, B. (2005). Corporate governance, economic entrenchment and growth. Journal of Economic Literature, 43, 655–720.

    Article  Google Scholar 

  • Nadler, J. & Schulman, M. (2015). Favoritism, cronyism, and nepotism. Santa Clara University. Retrieved from: https://www.scu.edu/government-ethics/resources/what-is-government-ethics/favoritism-cronyism-and-nepotism/.

  • Neter, J., Wasserman, W., & Kunter, M. H. (1990). Applied linear statistical models: regression, analysis of variance, and experimental design (3rd ed.). Homewood, IL: Irwin.

    Google Scholar 

  • Nikkel, M. I. (1995). Note: ‘Chinese Characteristics’ in corporate clothing: questions of fiduciary duty in China’s company law. Minnesota Law Review, 80, 503.

    Google Scholar 

  • Ocasio, W. (1994). Political dynamics and the circulation of power: CEO succession in U.S. industrial corporations, 1960–1990. Administrative Science Quarterly, 39, 285–312.

    Article  Google Scholar 

  • Ocasio, W. (1999). Institutionalized action and corporate governance: The reliance on rules of CEO succession. Administrative Science Quarterly, 44(2), 384–416.

    Article  Google Scholar 

  • Park, J., Lee, H., & Kim, C. (2014). Corporate social responsibilities, consumer trust and corporate reputation: South Korean consumers’ perspectives. Journal of Business Research, 67, 295–302.

    Article  Google Scholar 

  • Parrino, R. (1997). CEO turnover and outside succession: A cross-sectional analysis. Journal of Financial Economics, 46(2), 165–197.

    Article  Google Scholar 

  • Peng, M. W. (2003). Institutional transitions and strategic choices. Academy of Management Review, 28, 275–296.

    Article  Google Scholar 

  • Peng, M. W., Tan, J., & Tong, T. W. (2004). Ownership types and strategic groups in an emerging economy. Journal of Management Studies, 41, 1105–1129.

    Article  Google Scholar 

  • Podolny, J. M. (1994). Market uncertainty and the social character of economic exchange. Administrative Science Quarterly, 39, 458–483.

    Article  Google Scholar 

  • Podolny, J. M., & Baron, J. N. (1997). Resources and relationships: Social networks and mobility in the workplace. American Sociological Review, 62, 673–693.

    Article  Google Scholar 

  • Porter, M. E., & Kramer, M. R. (2006). Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78–92.

    Google Scholar 

  • Portes, A., & Sensenbrenner, J. (1993). Embeddedness and immigration: Notes on the social determinants of economic action. American Journal of Sociology, 9, 1320–1351.

    Article  Google Scholar 

  • Redding, S. G. (1990). The spirit of Chinese capitalism. New York: Walter de Gruyter.

    Book  Google Scholar 

  • Ruef, M., Aldrich, H. E., & Carter, N. M. (2003). The structure of founding teams: Homophily, strong ties, and isolation among U.S. entrepreneurs. American Sociological Review, 68(2), 195–222.

    Article  Google Scholar 

  • Salancik, G. R., & Pfeffer, J. (1980). Effects of ownership and performance on executive tenure in U.S. corporations. Academy of Management Journal, 23, 653–664.

    Article  Google Scholar 

  • See, G. (2009). Harmonious society and Chinese CSR: Is there really a link? Journal of Business Ethics, 89, 1–22.

    Article  Google Scholar 

  • Shahab, Y., Ntim, C. G., & Ullah, F. (2019). The brighter side of being socially responsible: CSR ratings and financial distress among Chinese state and non-state-owned firms. Applied Economics Letters, 26(3), 180–186.

    Article  Google Scholar 

  • Shen, W., & Cannella, A. A. (2002a). Power dynamics within top management and their impacts on CEO dismissal followed by inside succession. Academy of Management Journal, 45, 1195–1206.

    Article  Google Scholar 

  • Shen, W., & Cannella, A. A. (2002b). Revisiting the performance consequences of CEO succession: The impacts of successor type, postsuccession senior executive dismissal, and departing CEO tenure. Academy of Management Journal, 45(4), 717–733.

    Article  Google Scholar 

  • Sheng, S., Zhou, K. Z., & Li, J. J. (2011). The effects of business and political ties on firm performance: Evidence from China. Journal of Marketing, 75, 1–15.

    Article  Google Scholar 

  • Shiu, Y. M., & Yang, S. L. (2017). Does engagement in corporate social responsibility provide strategic insurance-like effects? Strategic Management Journal, 38, 455–470.

    Article  Google Scholar 

  • Shleifer, A. (1998). State versus private ownership. Journal of Economic Perspectives, 12, 133–150.

    Article  Google Scholar 

  • Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. Journal of Finance, 52, 737–783.

    Article  Google Scholar 

  • Su, J., & He, J. (2010). Does giving lead to getting? Evidence from Chinese private enterprises. Journal of Business Ethics, 93, 73–90.

    Article  Google Scholar 

  • Su, C., & Littlefield, J. E. (2001). Entering Guanxi: A business ethical dilemma in Mainland China? Journal of Business Ethics, 33, 199–210.

    Article  Google Scholar 

  • Sun, Q., & Tong, W. H. S. (2003). China share issue privatization: The extent of its success. Journal of Financial Economics, 70, 183–222.

    Article  Google Scholar 

  • Tajfel, H., & Turner, J. C. (1986). The social identity theory of intergroup behavior. In S. Worche & W. G. Austin (Eds.), Psychology of intergroup relations (2nd ed., pp. 7–24). Chicago, IL: Nelson-Hall.

    Google Scholar 

  • Tsui, A., & Farh, J. L. (1997). Where Guanxi matters: Relational demography and Guanxi in the Chinese context. Work and Occupations, 24, 56–79.

    Article  Google Scholar 

  • Turban, D. B., & Greening, D. W. (1997). Corporate social performance and organizational attractiveness to prospective employees. Academy of Management Journal, 40, 658–672.

    Article  Google Scholar 

  • Turner, J. C., Hogg, M. A., Oakes, P. J., Reicher, S. D., & Wetherell, M. S. (1987). Rediscovering the social group: A Self-categorization theory. Cambridge, MA: Blackwell.

    Google Scholar 

  • Uzzi, B. (1997). Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 42, 35–67.

    Article  Google Scholar 

  • Vancil, R. M. (1987). Passing the baton. Boston, MA: Harvard University Press.

    Google Scholar 

  • Walsh, J. P., & Seward, J. K. (1990). On the efficiency of internal and external corporate control mechanisms. Academy of Management Review, 15, 421–458.

    Article  Google Scholar 

  • Warner, J. B., Watts, R. L., & Wruck, K. H. (1988). Stock prices and top management changes. Journal of Financial Economics, 20(1), 461–492.

    Article  Google Scholar 

  • Warren, D. E., Dunfee, T. W., & Li, N. (2004). Social exchange in China: The double-edged sword of guanxi. Journal of Business Ethics, 55(4), 355–372.

    Article  Google Scholar 

  • Weber, M. (1968). Economy and Society. G. Roth, C. Wittich (eds). New York: Bedminster Press.

  • Wei, Z., Shen, H., Zhou, K. Z., & Li, J. J. (2017). How does environmental corporate social responsibility matter in a dysfunctional institutional environment? Evidence from China. Journal of Business Ethics, 140, 209–223.

    Article  Google Scholar 

  • Westphal, J. D., & Khanna, P. (2003). Keeping directors in line: Social distancing as a control mechanism in the corporate elite. Administrative Science Quarterly, 48(3), 361–398.

    Article  Google Scholar 

  • Wiersema, M. F., & Bowen, H. P. (2009). The use of limited dependent variable techniques in strategy research: Issues and methods. Strategic Management Journal, 30(6), 679–692.

    Article  Google Scholar 

  • Wiersema, M. F., & Zhang, Y. (2011). CEO dismissal: The role of investment analysts. Strategic Management Journal, 32(11), 1161–1182.

    Article  Google Scholar 

  • Williamson, O. E. (1985). The economic institutions of capitalism: Firms, markets, relational contracting. New York: Free Press.

    Google Scholar 

  • Wong, S. (1985). The Chinese family firm: A model. British Journal of Sociology, 36, 58–72.

    Article  Google Scholar 

  • Wu, W., Firth, M., & Rui, O. M. (2014). Trust and the provision of trade credit. Journal of Banking & Finance, 39, 146–159.

    Article  Google Scholar 

  • Xie, Y. (2017), It’s whom you know that counts. Science, 10, 1022–1023.

    Article  Google Scholar 

  • Xu, D., Lu, J., & Gu, Q. (2014). Organizational forms and multi-population dynamics: Economic transition in China. Administrative Science Quarterly, 59(3), 517–547.

    Article  Google Scholar 

  • Yang, M. M. (1994). Gifts, favors, and banquets: The art of social relationships in China. Ithaca, NY: Cornell University Press.

    Google Scholar 

  • Yang, M., Bento, P., & Akbar, A. (2019). Does CSR Influence firm performance indicators? Evidence from Chinese pharmaceutical enterprises. Sustainability, 11(20), 5656.

    Article  Google Scholar 

  • Yermack, D. (2006). Golden handshakes: Separation pay for retired and dismissed CEOs. Journal of Accounting and Economics, 41(3), 237–256.

    Article  Google Scholar 

  • Yonker, S. E. (2017). Do managers give hometown labor an edge? Review of Financial Studies, 30, 3581–3604.

    Article  Google Scholar 

  • You, J., & Du, G. (2012). Are political connections a blessing or a curse? Evidence from CEO turnover in China. Corporate Governance: An International Review, 20(2), 179–194.

    Article  Google Scholar 

  • Young, M. N., Peng, M. W., Ahlstrom, D., Bruton, G. D., & Jiang, Y. (2008). Corporate governance in emerging economies: A review of the principal-principal perspective. Journal of Management Studies, 45, 196–220.

    Article  Google Scholar 

  • Zhong, M., Xu, R., Liao, X., & Zhang, S. (2019). Do CSR ratings converge in China? A comparison between RKS and Hexun scores. Sustainability, 11(14), 3921.

    Article  Google Scholar 

  • Zhu, J., Ye, K., Tucker, J. W., & Chan, K. J. C. (2016). Board hierarchy, independent directors, and firm value: Evidence from China. Journal of Corporate Finance, 41, 262–279.

    Article  Google Scholar 

Download references

Funding

Qiu acknowledges financial support from the Social Sciences and Humanities Research Council of Canada. Pan and Xiao acknowledge financial support from the Natural Science Foundation of China (Grant No. 71902168, 71972160, 71772155).

Author information

Authors and Affiliations

  1. DeGroote School of Business, McMaster University, 1280 Main Street West, Hamilton, L8S 4L8, Canada

    Hongjin Zhu & Jiaping Qiu

  2. School of Economics, Xiamen University, 422 Siming South Road, Xiamen, 361005, Fujian, China

    Yue Pan

  3. School of Management, Xiamen University, 422 Siming South Road, Xiamen, 361005, Fujian, China

    Jinli Xiao

Authors
  1. Hongjin Zhu
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Yue Pan
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Jiaping Qiu
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Jinli Xiao
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Jiaping Qiu.

Ethics declarations

Conflict of interest

The authors declare that they have no conflicts of interest.

Ethical Approval

No human subjects were studied, so IRB approval was not required.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendices

Appendix 1

See Table 9.

Table 9 Weighting scheme of different dimensions in the Hexun CSR index
Full size table

Appendix 2

See Table 10.

Table 10 Variable definitions
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Zhu, H., Pan, Y., Qiu, J. et al. Hometown Ties and Favoritism in Chinese Corporations: Evidence from CEO Dismissals and Corporate Social Responsibility. J Bus Ethics 176, 283–310 (2022). https://doi.org/10.1007/s10551-020-04711-1

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-020-04711-1

Keywords

Search

Navigation