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<p>The growing pay gap between top executives and non-executive employees has become a key hurdle in combating income disparity, yet the proactive roles of CEOs in regulating such morally charged endemic are underexplored. Invoking the place attachment theory in sociopsychology, we propose that the pay gap would become smaller among firms located in the CEOs’ hometowns, especially in countries with strong norms of family origin and community belonging like China. By tracking a sample of Chinese public-listed firms from 2008 to 2019, we find a negative relationship between having hometown CEOs and the executive-employee pay gap. The effect of hometown attachment becomes strengthened when the CEOs possess higher social status, whereas it is weakened when their firms are headquartered in more market liberal regions. We find a more pronounced pattern for CEOs with longer tenures in hometowns and for family firms, and our findings remain robust to a series of endogeneity and robustness tests. While showcasing the special institutional characteristics of China, our study enriches the knowledge of income disparity by showcasing a CEO locality effect in regard to the executive-employee pay gap. We further unveil the effect of executives’ social status and subnational institutional differences in directing the hometown attachment effect.</p>

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Home is where the heart is? Hometown attachment and firms’ executive-employee pay gap

  • 期刊论文

  • 发表日期：

    2026年6月23日

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  • Ran An,
  • Bin Liu,
  • Jiayi Zhang

摘要

The growing pay gap between top executives and non-executive employees has become a key hurdle in combating income disparity, yet the proactive roles of CEOs in regulating such morally charged endemic are underexplored. Invoking the place attachment theory in sociopsychology, we propose that the pay gap would become smaller among firms located in the CEOs’ hometowns, especially in countries with strong norms of family origin and community belonging like China. By tracking a sample of Chinese public-listed firms from 2008 to 2019, we find a negative relationship between having hometown CEOs and the executive-employee pay gap. The effect of hometown attachment becomes strengthened when the CEOs possess higher social status, whereas it is weakened when their firms are headquartered in more market liberal regions. We find a more pronounced pattern for CEOs with longer tenures in hometowns and for family firms, and our findings remain robust to a series of endogeneity and robustness tests. While showcasing the special institutional characteristics of China, our study enriches the knowledge of income disparity by showcasing a CEO locality effect in regard to the executive-employee pay gap. We further unveil the effect of executives’ social status and subnational institutional differences in directing the hometown attachment effect.