We exploit variation in cultural heritage across CEOs who are children and grandchildren of immigrants to demonstrate that the cultural origins of CEOs matter for corporate outcomes. Following shocks to industry competition, firms led by CEOs who are second- or third-generation immigrants are associated with a 6.2% higher profitability than the average firm. This effect weakens over successive immigrant generations, is not detected for top executives other than the CEO, and can be explained by specific cultural values that prevail in the CEO’s country of origin. Our paper offers novel insights on the interactions between informal institutions and corporate outcomes.
- cultural values
- corporate investments