Received: 17 December 2022 Revised: 28 August 2023 Accepted: 11 September 2023

DOI: 10.1002/bse.3581

RESEARCH ARTICLE

CEO poverty experience and corporate environmental

violations

Lei Du | Shenggang Ren

Business School, Central South University,

Changsha, China Abstract
This study explores the effect of chief executive officer (CEO) early-life poverty
Correspondence
Shenggang Ren, Business School, Central experiences on firms' environmental violations. By integrating upper echelon
South University, Changsha, China.
theory and imprinting theory, we argue that CEOs' poverty imprints cause them to
Email: [email protected]
re-evaluate their life priorities and channel managerial attention to their firms'
Funding information
economic goal domains, thereby encouraging CEOs to pursue firm economic
National Natural Science Foundation of China,
Grant/Award Number: 71974205; performance rather than environmental responsibility. Consequently, they manifest a
Fundamental Research Funds for the Central
tendency to engage in environmental violations. An analysis of a large sample of
Universities of Central South University,
Grant/Award Number: 2020zzts020 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.

KEYWORDS
CEO poverty experience, environmental violations, imprinting theory

1 | I N T RO DU CT I O N stakeholders are able to sanction firms with lax environmental

commitments, most of which require more conscious corporate
Given the severe climatic challenges faced today, pollution violations actions (Hernández et al., 2010). As a result, firms' environmental
by firms have been substantially increasing concerns (Cappa compliance decisions tend to rely more heavily on decision-makers'
et al., 2022; D'Angelo et al., 2023; Hernández et al., 2010; Marquis & sense of moral obligation and their positive preference for
Bird, 2018). Compared with the research on positive aspects of environmental awareness.
environmental performance, such as environmental responsibility and Upper echelons theory argues that a significant proportion of the
green innovation, environmental violations receive less academic variance in firms' pro-environmental decisions can be explained by
attention, and their causes are more complex (Zeng et al., 2022). chief executive officer (CEO)-level heterogeneity. Existing research
Existing studies have also highlighted important differences between has found that the past experience characteristics of CEOs can have a
the two (Bansal & Song, 2017; Jin et al., 2020). Specifically, significant impact on the environmental commitments of firms, like
proactively assuming environmental responsibility can help firms gain their education experiences (Amore et al., 2019; Lewis et al., 2014),
social approval and applause. However, polluting firms often struggle military experiences (Benmelech & Frydman, 2015; Gao et al., 2021),
to gain recognition merely by adhering to environmental compliance, foreign experiences (Quan et al., 2021; Wang et al., 2022), early-life
as such behavior is considered a basic obligation of corporate hometown experiences (Du et al., 2022; Ren et al., 2021), and early-
citizenship (Lin & Müller, 2013). And a commitment to avoiding life traumatic experiences (Li et al., 2023; O'Sullivan et al., 2021).
environmental violations hardly warrants praise. Moreover, it is mainly However, the influence of a CEO's early-life poverty experience on
in the most extreme cases, such as toxic spills, that external environmental decision-making has not been extensively explored.
This research complements existing work by examining the imprint of
Abbreviation: CEO, chief executive officer. a CEO's early-life poverty experiences and how they provoke a

Bus Strat Env. 2023;1–12. wileyonlinelibrary.com/journal/bse © 2023 ERP Environment and John Wiley & Sons Ltd. 1
2 DU and REN

recalibration of life priorities. Poverty wounding and scarcity imprints A better understanding of these moderating effects allows us to
originating from childhood poverty experiences may lead CEOs to further elucidate under what conditions CEOs' cognitive imprint has a
pursue firm economic performance rather than environmental goals. stronger impact on firms' environmental outcomes.
Consequently, our research question is what is the effect of CEOs' The rest of the paper is organized as follows. Section 2 reviews
poverty experiences on corporate environmental violations? the relevant studies in this area Section 3 formulates research
According to imprinting theory, some early experiences during an hypotheses. Section 4 describes the data and estimation methods,
individual's development have a long-term impact on that person's and Section 5 reports the empirical results. Section 6 presents and
later work and life behaviors (Marquis & Tilcsik, 2013). Zhang et al. discusses and conclusions.
(2022) found that CEOs' early experiences of poverty led them to
persistently perceive existential threats, which may encourage them
to make more risky decisions in order to access more resources and 2 | LI T E RA T U R E RE V I E W
survival opportunities. Numerous studies in social psychology have
also examined the idea that feelings of stress and life priorities are 2.1 | The influence of poverty experiences
reinforced by an individual's poverty experiences (Carvalho
et al., 2016; Haushofer & Fehr, 2014; McLeod & Kessler, 1990). In this Psychological research emphasizes that poverty experiences
study, we further investigate how the imprint of poverty in early life predispose individuals to perceive more threats to survival in their
influences environmental decisions. We focus on environmental lives and to make survival and development their highest priorities
violations because, unlike other strategic decisions, environmental (Chaudry & Wimer, 2016). A state of scarcity fills people's minds with
violations are inherently situated in a context of conflict with their most pressing needs, and a poverty mindset turns attention to
economic goals (Bansal & Song, 2017). Thus, decisions about issues related to the perpetuation of poverty, which may result in an
environmental violations may better capture how CEOs' early poverty excessive focus on money (Haushofer & Fehr, 2014). Feelings of
experiences influence their decision prioritization. money scarcity can shape psychological preferences that focus on
We test our theoretical expectations using longitudinal data immediate gains. This is because they need to think more about the
(2008–2020) on 658 Chinese listed firms from 16 highly polluting impact of various events in their daily lives on their immediate lives,
industries. We also consider the moderating effect that CEOs' higher and only then can they get through their immediate dilemmas
educational background and horizontal performance gap play a (Carvalho et al., 2016; Haushofer & Fehr, 2014). This also means that
reinforcing/weakening role. To address potential endogeneity issues, people in a disadvantaged position may focus their attention on the
we employ a fixed effects model and a difference-in-differences opportunity to profit rather than the danger of loss (Kish-Gephart &
estimation strategy based on CEO turnover. And we conduct Campbell, 2015).
some robustness tests, including alternative independent variables, Poverty experiences also bring individuals stronger stress feelings,
alternative dependent variables, and alternative regression models. and they need to endure more financial difficulties and uncertainty in
This research contributes to the existing literature in three ways. their daily lives, which can lead to greater anxiety and tension
Firstly, this research enriches our understanding of how top (McLeod & Kessler, 1990). Zhang et al. (2022) found that CEOs' early
executives' early life experiences influence the decision-making poverty experiences lead to persistent perceptions of existential
process within a firm. A plethora of existing research has focused on threat, encouraging them to take more risks to obtain more resources
how a CEO's career experiences (Amore et al., 2019; Wang and survival opportunities and to adopt faster and even opportunistic
et al., 2022), early-life hometown experiences (Du et al., 2022; Ren strategies. Sharma et al. (2014) noted that economic deprivation can
et al., 2021), and early-life traumatic experiences (Li et al., 2023; relax ethical standards and increase the likelihood of engaging in
O'Sullivan et al., 2021) influence a firm's environmental decision- unethical behavior.
making. Our study further elucidates why a CEO's early-life poverty
experiences have a negative impact on the environmental
performance of the firm. 2.2 | Imprinting theory
Secondly, from the perspective of a CEO's poverty experience,
we illustrate the process of imprint transfer, that is, how a CEO's Imprinting theory emphasizes that an individual's experiences during
cognitive imprints influence the firm they lead. Our study focuses on sensitive periods have a persistent effect on certain traits that in turn
how poverty imprint reinforces stress feelings, which leads CEOs to influence the individual's decision-making and behavior (Marquis &
rerank the goals of importance in their lives. By demonstrating how Tilcsik, 2013). Experiences are events that an individual has personally
the early cognitive imprints of a CEO exert a lasting influence on the seen, been involved in, or encountered, and when such events are
behavior of the firm, our research advances the integration of upper widespread or significant in time, they can imprint themselves upon
echelons theory and imprinting theory. the individual (Malmendier et al., 2011). Although this sensitive period
Thirdly, we further demonstrated how the CEO's cognitive is particularly short, the imprint left on the individual is profound and
imprint was eroded/awakened by exploring the moderating effect of continues to influence the individual's future behavior (Dokko
CEOs' higher education and firms' horizontal performance gaps. et al., 2009; Tilcsik, 2014).
DU and REN 3

Individual imprint influences managerial and organizational Campbell et al. (2019) found that the birth order of CEOs has a
decision-making behavior by affecting managers' implicit values significant impact on corporate risk decision-making.
(e.g., responsibility, self-focus, and altruism), cognitive structures, or In recent years, scholars have begun to focus on the impacts of
psychological traits (e.g., risk preferences, narcissism, and overconfi- CEOs' early experiences with poverty. CEOs who have experienced
dence) (Marquis & Tilcsik, 2013). Wesley et al. (2021) found that poverty may harbor a sense of self-deprecation due to their
military experience had a significant imprinting effect on executives disadvantaged backgrounds. This often drives them to participate in
and that military experience gave them greater moral discipline and merger and acquisition activities, hoping to compensate for their per-
dedication, which led them to commit fewer violations. O'Sullivan ceived deficiencies by acquiring material wealth and improving their
et al. (2021) found that CEOs who had experienced disaster social status (Gao & Yang, 2020). Kish-Gephart and Campbell (2015)
environments had stronger empathy, which induced them to make found that CEOs from lower socio-economic backgrounds tend to be
more socially responsible decisions. Kish-Gephart and Campbell more risk-prone as they are keen to change their circumstances.
(2015) found that CEOs born into lower social class backgrounds have Additionally, those born into poverty, who have been at the absolute
higher sensitivity to potential threats, which in turn can influence bottom in terms of money, power, and social status, need to make
corporate risk decisions. more efforts to attain their current power and achievements. This
Imprinting has ongoing effects on individuals; however, such stark life contrast makes CEOs who were once impoverished more
effects are not constant and may change dynamically with subsequent aware of the difficulty of gaining power and more fearful of losing
changes in the environment (Simsek et al., 2015). Dokko et al. (2009) their existing positions, thus making them more ambitious (Zhang
found that individuals develop transferable and applicable skills and et al., 2022). Furthermore, some scholars have also examined the
experiences from prior work experiences that help them excel in impact of poverty experiences on CEOs' altruistic emotions and
similar work environments. But when the current work environment empathy, which in turn affect the firm's corporate social responsibility
is very different from the initial work environment, ingrained cognitive (CSR) behavior (Han et al., 2022; Xu & Ma, 2021). It is evident that
patterns resulting from imprinted values also reduce an individual's experiences of poverty play a shaping role in various psychological
ability to understand, accept, and respond to the new environment. traits and decision preferences of CEOs. However, current research
This means that imprinting perceptions are eroded or awakened on how CEO poverty experiences impact firm environment-related
(Marquis & Tilcsik, 2013). Tilcsik (2014) proposed that the imprinting behaviors remains insufficient.
effect is stronger when the initial environment in which the imprint
was formed is highly congruent with the current environment;
conversely, the imprinting effect decays when the cognitive patterns 3 | RE SE ARC H HY POT H ES ES
and competence imprints left behind are able to adapt to the demands
of the new environment. 3.1 | The influence of CEO poverty experiences on
corporate environmental violations

2.3 | CEOs' prior experiences and firm behavior We propose that firms bearing their CEOs' poverty imprint will be
more prone to environmental violations. This proposition is driven by
Based on the upper echelons theory by Hambrick and Mason (1984), three principal arguments. Firstly, CEOs who have experienced child-
the decision-making patterns of top executives exert significant hood poverty continue to perceive existential threats in their lives and
influence on the growth of a firm. Their characteristics and values rank survival and development as their firms' highest priorities, in con-
shape their decision-making style and approach. Their early trast to CEOs who have not experienced poverty (Zhang et al., 2022).
experiences indirectly affect their decision-making and management As a result, CEOs with experience of childhood poverty will prioritize
styles by altering their values, moral sentiments, and cognitive levels. business development issues over environmental issues in their
Malmendier et al. (2011) introduced the impact of early experiences corporate decisions. Issues such as environmental violations do not
in their research on firm finance, revealing that senior managers who have immediate consequences, and even if firms are penalized, the
had experienced military service or the Great Depression had their costs they are required to pay are limited (e.g., lower fines) (Wu &
management decisions influenced by these early life experiences. Cao, 2021). In this case, cost savings and development promoting
Subsequently, many scholars began to explore the impact of execu- would be the priorities, thus fostering violation engagement. It is
tives' personal traits and early experiences on firm decision-making, important for CEOs to demonstrate their competence by maximizing
especially the profound effect of early experiences on personal value corporate effectiveness within a limited tenure (Pandher, 2022).
systems (Hamori & Koyuncu, 2015; Kong et al., 2021). Bernile et al. Especially when faced with conflicting environmental and economic
(2017) pointed out that CEOs who had suffered severe disasters, such goals, CEOs with poverty experiences will be more inclined to achieve
as natural disasters, in their early lives, experienced significant losses, economic goals by sacrificing environmental goals, given the pressures
or even lost loved ones, approached risk in a distinctly cautious of limited tenure and the urgency to deliver short-term results.
manner. Marquis and Qiao (2020) explored the influence of CEOs' Secondly, the experience of poverty motivates CEOs to believe
communist ideological imprinting on corporate internationalization. that their fate is absolutely in their own hands. They feel the need to
4 DU and REN

rid themselves of their insecurities through their own continuous demonstrated how CEOs' cognitive imprint was eroded/awakened by
efforts because they are afraid of falling back into poverty (Zhang exploring the moderating effect of their higher education and firms'
et al., 2022). They become more rational and realistic, not worrying horizontal performance gaps.
about the steps they must take to succeed or what others think of Specifically, universities provide a wide range of knowledge and
them but focusing only on building a stronger business empire (Gul educational resources through which students can broaden their hori-
et al., 2020; Lee et al., 2017). Avoiding environmental violations, zons by engaging with new ideas and perspectives (Kish-Gephart &
which do not generate social approval, require additional resources, Campbell, 2015). This transformation of self-awareness contributes to
and may affect economic performance, is not appealing to CEOs. breaking free from the impoverished imprint of one's upbringing, fos-
CEOs who have experienced poverty may place greater emphasis on tering independent and autonomous thinking patterns. Consequently,
the importance of success and fear the loss of their current position, higher education may attenuate the negative impact of the poverty
as poor economic performance could potentially lead to their imprint on individuals. In addition, the greater performance gap among
dismissal. Conversely, poor environmental performance may only peers amplifies CEOs' pressure, indicating a potential threat to their
result in fines. As a result, they are more passionate about economic future performance (Berrone et al., 2013). This may evoke memories
goals. The following statements by the CEO of Goldman Sachs (Lloyd of childhood poverty, serving as an urgent reminder that could lead
Blankfein) at the 41st commencement of LaGuardia Community managers to be more inclined toward short-term solutions and
College attest to this: opportunistic strategies. Therefore, performance gap may amplify the
“My father sorted mail for the post office. He worked nights impact of CEOs experiencing poverty on environmental violations.
because it paid 10% more than a day shift. … … To this day, I can't
forget how insecure I felt, but it made me work harder. Once I realized
I belonged, I became more ambitious. Ambition is your inner voice 3.3 | CEO's higher education
that tells you can and should strive to go beyond your circumstances
or station in life”. Higher education affects thinking and cognitive style, allowing the
Thirdly, childhood experiences of poverty make CEOs more individual receiving it to gain more insights and knowledge, and thus
dependent on their own capabilities. They believe that even when emerges as a person of good quality (Hambrick & Mason, 1984).
operating under more difficult conditions than their peers, they can Heyden et al. (2017) have argued that managers with higher
achieve the same goals (Lee et al., 2017). This makes CEOs overly education levels than others have more active minds, are good at
dependent on their own judgment and more likely to underestimate seeing problems from multiple perspectives, and therefore have
risk (Tang et al., 2015), leading them to believe the illusion that viola- stronger problem-solving skills. Lewis et al. (2014) found that CEOs
tion events have limited negative impact on their business and that with higher education are more likely to see environmental issues as
even if they do occur, they can be effectively controlled without much strategic opportunities compared with other corporate executives. In
impact (Zhang et al., 2020). Thus, CEOs with poverty experiences our context, decisions that solely prioritize the economic objectives of
might be inclined to allocate resources toward the economic firms while disregarding environmental goals may become more
objectives of the firm, which could provide them with greater success, cautious for elite-educated poverty-imprinted CEOs.
rather than toward environmental goals that they perceive to have In addition, higher education also means that individuals can
limited impact and negligible value. This also makes them more likely escape the effects of their poor birth environment and gain
to achieve economic performance by sacrificing environmental greater access to opportunities and resources (Kish-Gephart &
performance. We therefore anticipate that a poverty-imprinted CEO Campbell, 2015). Xu and Ma (2021) found that, compared with the
will lead to a firm engaging in more environmental violations activities. uneducated poor, the educated poor are more likely to emerge from
Thus, the following hypothesis is proposed: adversity and be reborn and that their moral sensibility is strength-
ened. Thus, higher education can somewhat reduce the insecurity of
Hypothesis 1. A positive relationship exists between environmental poverty imprints, which in turn ameliorates the
CEOs' poverty experience and corporate environmental extremity of CEO decisions. Therefore, the following hypothesis is
violations. proposed:

Hypothesis 2. The positive effect of CEOs' poverty

3.2 | The moderating effects experience on environmental violations will be weaker
among well-educated CEOs.
Although an imprint is relatively stable, individuals' cognitive informa-
tion processing systems are also adaptive, capable of shaping and
changing individual behavior through learning (Marquis & Qiao, 2020). 3.4 | Horizontal performance gap of firms
Poverty imprint may evolve over time, declining in response to
feedback (Xu & Ma, 2021), or being reinforced by the stimulation of When firms face a larger performance gap than their peers, resource
certain events (Marquis & Qiao, 2020). Therefore, we further constraints trigger a level of existential threat that drives decision-
DU and REN 5

makers. For poverty-imprinted CEOs, the perception of existential firm's financial data from the China Stock Market and Accounting
threat is amplified, forcing them to take more action to reverse the Research Database. Second, due to the nonmandatory disclosure of
current disadvantage. As Berrone et al. (2013) point out, when CEO's personal information, we manually collected the CEO's early-life
business resources are more strained, firms should focus first on data through Baidu and Google. Third, we collected the data on violation
“putting out fires” rather than engaging in long-term behaviors such records from the Institute of Public and Environmental Affairs.
as environmental responsibility. The reminder of the survival urgency We use the following steps to process the initial sample: (1) To
can make managers more inclined to short-term solutions, accelerated avoid the impact of outliers, we deleted those special treatment
speculation, or even opportunistic strategies (Zhang et al., 2022). (ST) firms that are at risk of being delisted due to losses incurred in
In addition, greater performance gaps place more pressure on two or three consecutive fiscal years. (2) We deleted the sample of
CEOs, highlighting the greater performance threats they will endure in insolvent firms. (3) We excluded the samples that went public in the
the coming period. This not only triggers memories of childhood current year. Finally, we combined data from different sources and
poverty but also imposes stronger pressure on CEOs, which in turn obtained 7372 observations from 658 firms in 2008–2020.
stimulates them to adopt faster solutions (Zhang et al., 2022). Bianchi
and Mohliver (2016) found in their study that when organizations are
under pressure, managers mitigate that by any means necessary, 4.2 | Measurement of the variables
including engaging in illegal behavior. Thus, when under greater
performance gap pressure, poverty-imprinted CEOs faced with 4.2.1 | Dependent variable
conflicting environmental and economic goals are more inclined to
resolve their current dilemma through environmentally opportunistic Corporate environmental violations (violations). Violations represent
behavior. Therefore, the following hypothesis is proposed: the number of administrative penalties an enterprise has received.
The Institute of Public and Environmental Affairs collects and publishes cor-
Hypothesis 3. The positive effect of CEOs' poverty expe- porate environmental regulatory violations records (Marquis & Bird, 2018).
rience on environmental violations will be strengthened for
firms with greater horizontal performance gaps.
4.2.2 | Independent variable

4 | M E TH O DO LO GY CEOs' early-life poverty experience (CEO_poverty): Consistent with

previous studies (Zhang et al., 2022), CEO_poverty is assigned a value
4.1 | Sample and data collection of 1 if the CEO's birthplace is a poverty-stricken county and 0 other-
wise. In the robustness session, we manually searched each CEO's
The sample of this study is publicly listed Chinese firms in Shanghai biography and related news and coded CEO_poverty as 1 if he
Stock Exchange and Shenzhen Stock Exchange from 2008 to 2020. mentioned his poor childhood experience and 0 otherwise. In
Our focus on Chinese corporations for this study is driven by several addition, following the research of Xu and Ma (2021), we use the
pivotal reasons: Firstly, China, the globe's largest developing economy, experience of the Great Famine (1959–1961) as a proxy measurement
manifests a complex interplay between economic growth and for poverty experiences.
environmental degradation. The prominent issue of corporate envi-
ronmental negligence in China underscores the practical significance
of our investigation into Chinese entities. Secondly, economic reforms 4.2.3 | Moderating variables
and the policy of opening-up in China have paved the way for individ-
uals from impoverished backgrounds to ascend to executive roles, CEOs' higher education (higher education): Consistent with previous
providing a diverse backdrop to scrutinize the influence of CEOs' studies (Kish-Gephart & Campbell, 2015; Xu & Ma, 2021), higher
early-life poverty experiences on firms' environmental violations. education is assigned a value of 1 if the CEO graduated from a 985
In this study, we used the following sampling procedure. First, we college in China or a globally recognized college and 0 otherwise.
selected 16 heavily polluting industries according to the industrial clas- Horizontal performance gap (horizontal gap): Horizontal gap is
sification table of environmental inspection of listed companies (2008), assigned a value of 1 if firm's return on assets (ROA) is lower than the
because the firms in the heavily polluting industries have the higher average of its industry and 0 otherwise.
sensitivity to environmental issues and produce greater impact on the
environment. Second, firms with pollution violations mainly focus on
the heavily polluting industries. Considering the availability of data, 4.2.4 | Control variables
we selected the listed companies listed in China in 2008–2020 as the
initial samples of the above heavily polluting industries. We control other variables that may impact environmental violations
The data used in the sample come from the following three at two levels: CEO-level and firm-level. Specifically, CEO-level factors
sources. First, we obtained the CEO's resume information and the include age, gender, education (where 1 to 5, respectively, represent
6 DU and REN

below high school, high school, undergraduate, graduate, and doctoral Violationit ¼ β0 þ β1 Turnoveri  Postt þ β2 Xit þ Yeart þ Firmi þ εit
levels), duality, tenure (measured in months of service), and compensa-
tion. Firm-level variables include firm age, firm size, states ownership In this model, Turnoveri is a dummy variable that describes the
(SOE), ownership concentration (concentration), board size, board inde- CEO transition, which is equal to 1 if a firm is in the treatment group
pendence (independence), return on assets, and leverage ratio (LEV). and 0 otherwise. Postt is a dummy variable that is equal to 1 if the
CEO changes in a certain year and 0 otherwise. Specifically, we
consider the following two cases. In the first case, if a firm changes its
5 | EMPIRICAL RESULTS nonpoverty CEO (CEO_poverty is 0) to a poverty-imprinted CEO
(CEO_poverty is 1), these observations constitute the treatment
5.1 | Descriptive statistics group. And all nonpoverty CEO (CEO_poverty is 0) constitute the con-
trol group. In the second case, if a firm changes its poverty-imprinted
Table 1 reports descriptive statistics. It can be seen from the table CEO (CEO_poverty is 1) to a nonpoverty CEO (CEO_poverty is 0),
that the standard deviation of violations is four times the average, these observations constitute the treatment group. And all poverty-
which indicates that some firms have terrible environmental imprinted CEO (CEO_poverty is 1) constitute the control group.
performance. At the same time, Table 1 reports Pearson's correlation The results are shown in Table 3. Column 1 reports the estimation
coefficient between variables, showing that there is no high results of the above first case. The coefficient of the intersection item
correlation between the variables. Turnover1  Post1 is significantly positive (b = 0.645, p < 0.05). The
coefficient shows that due to CEO turnover, a former CEO with a
nonpoverty was replaced by a new poverty-imprinted CEO, which
5.2 | Hypotheses testing motivates the firm to engage in more violations. Column 2 reports the
estimation results of the above second case. The coefficient of
Because violations are a counting variable, we adopt negative the intersection item Turnover2  Post2 is negatively significant
binomial regression. Table 2 shows the regression analysis results of (b =
0.537, p < 0.05). If a former CEO with poverty imprinting is
the effects of CEOs' poverty experience on firms' environmental replaced by a new nonpoverty CEO, the firms' violations will drop
violations. Column 1 includes only control variables and fixed effects. significantly. These two difference-in-differences regression results
In Column 2, we added independent variable; it is significantly positive confirm that CEO's poverty imprinting has a significant positive
(b = 0.479, p < 0.01), which shows that a poverty-imprinted CEO will impact on violations.
lead to a firm engaging in more environmental violations activities,
supporting Hypothesis 1.
In Column 4, the interaction between CEOs' poverty imprint and 5.4 | Robustness checks
higher education is significantly negative (b =
0.125, p < 0.05),
which indicates that the effect of CEOs' poverty experience on 5.4.1 | Alternative measures of CEO poverty
environmental violations will be weaker among well-educated CEOs, experience
supporting Hypothesis 2.
In Column 5, the interaction between CEOs' poverty imprint and We use a more granular solution to measure the CEO's early poverty
horizontal gap is significantly positive (b = 0.483, p < 0.05). This experience. We manually searched each CEO's biography and related
shows that the effect of CEOs' poverty experience on environmental news and coded CEO_poverty as 1 if he mentioned his poor
violations will be strengthened for firms with greater horizontal childhood experience and 0 otherwise. The result is still robust, as
performance gaps, supporting Hypothesis 3. Column 6 is a complete column 1 of Table 4 shows.
model, and results remain significant. In addition, following the research of Xu and Ma (2021), we use
the experience of the Great Famine (1959–1961) as a proxy measure-
ment for poverty experiences. Xu and Ma (2021) noted that children
5.3 | Endogenous check under the age of six have limited understanding of the world and
limited memory capacity. Therefore, we utilized data from two age
To control the potential endogeneity, we adopt quasi-natural groups (6–12 years and 13–18 years) as robustness measures. The
experiments to examine the effects of poverty-influenced decisions results are still robust, as shown in Columns 2 to 3 of Table 4.
by difference-in-differences method, which Ren et al. (2022) provided
the good model. The advantage of this method is that it corrects for
other (time-invariant unobserved) factors that might be associated 5.4.2 | Alternative measures of violations
with a change in environmental violations due to a change of CEO.
Thus, we constructed the following model to test the impact of CEO's We take green innovation as a reverse measurement indicator. Green
poverty imprint on the firms' environmental violations. The sample for innovation often means greater costs and risks, which requires
this test is 3–4 year window pre-/post-CEO turnover. decision-makers to be more long-term oriented (Ren et al., 2021). It is
DU and REN 7

TABLE 1 Descriptive statistics and correlation coefficients.

Variables 1 2 3 4 5 6 7 8 9
Violations 1
CEO poverty 0.052*** 1
Higher education
0.028**
0.317*** 1
Horizontal gap 0.044* 0.067***
0.015 1
CEO age 0.044
0.026* 0.065*** 0.060*** 1
CEO gender 0.007 0.019 0.011 0.025* 0.004 1
CEO education 0.023* 0.035** 0.001
0.022
0.121***
0.021 1
CEO duality
0.003
0.214*** 0.081***
0.019 0.133***
0.001
0.015 1
CEO tenure 0.056***
0.133*** 0.047*** 0.113*** 0.212***
0.027**
0.0130 0.098*** 1
CEO compensation 0.062*
0.026* 0.016 0.043*** 0.059***
0.018 0.057*** 0.068*** 0.155**
Board size 0.031 0.066*** 0.062***
0.001 0.002 0.028** 0.003
0.159***
0.087***
Independence
0.022**
0.092***
0.006 0.018 0.007
0.014
0.005 0.134*** 0.055***
Firm age 0.131 0.053*** 0.040*** 0.093*** 0.062***
0.02 0.02
0.038*** 0.186***
Firm size 0.162***
0.048*** 0.134*** 0.086*** 0.082*** 0.041*** 0.068***
0.113*** 0.017
Concentration
0.012* 0.01 0.037***
0.005 0.042*** 0.022 0.017
0.057***
0.097***
SOE 0.020* 0.070*** 0.082***
0.044*** 0.049*** 0.040***
0.023*
0.186***
0.070***
ROA 0.070** 0.043*** 0.108*** 0.003 0.060*** 0.042*** 0.053***
0.103***
0.038***
LEV 0.300*** 0.031** 0.004 0.056*** 0.031** 0.015 0.034** 0.026* 0.049***
Mean 0.834 0.276 0.094 0.322 49.454 0.927 3.499 0.232 41.385
Std. dev. 3.587 0.399 0.277 0.345 6.210 0.202 1.209 0.422 32.679

Abbreviations: LEV, leverage ratio; ROA, return on assets.

*Significance at the 10% level. **Significance at the 5% level. ***Significance at the 1% level.

TABLE 1 (Continued)

Variables 10 11 12 13 14 15 16 17 18
Violations
CEO poverty
Higher education
Horizontal gap
CEO age
CEO gender
CEO education
CEO duality
CEO tenure
CEO compensation 1
Board size
0.019 1
Independence 0.035**
0.365*** 1
Firm age 0.151*** 0.145***
0.098*** 1
Firm size 0.344*** 0.223***
0.075*** 0.087*** 1
Concentration 0.029** 0.069***
0.021
0.158*** 0.337*** 1
SOE
0.078*** 0.303***
0.208*** 0.139*** 0.156*** 0.122*** 1
ROA
0.052*** 0.292***
0.121*** 0.098*** 0.377*** 0.092*** 0.237*** 1
LEV 0.118*** 0.005
0.015 0.104*** 0.177*** 0.015
0.007 0.079*** 1
Mean 12.962 12.065 0.357 17.099 16.897 0.359 0.479 0.073 0.458
Std. dev. 0.833 4.047 0.096 5.151 1.437 0.153 0.500 0.195 1.239

Abbreviations: LEV, leverage ratio; ROA, return on assets.

*Significance at the 10% level. **Significance at the 5% level. ***Significance at the 1% level.
8 DU and REN

TABLE 2 Results from negative binomial regression on violations.

(1) (2) (3) (4) (5) (6)

CEO age
0.011
0.012
0.012
0.012
0.010
0.011
(0.012) (0.013) (0.014) (0.013) (0.011) (0.013)
CEO gender
0.134
0.126
0.114
0.134
0.135
0.110
(0.160) (0.161) (0.161) (0.161) (0.161) (0.161)
CEO education 0.037 0.034 0.033 0.036 0.036 0.035
(0.028) (0.028) (0.028) (0.028) (0.028) (0.028)
CEO duality 0.024 0.026* 0.019 0.028* 0.015 0.024*
(0.029) (0.019) (0.019) (0.019) (0.019) (0.019)
CEO tenure 0.004** 0.003*** 0.004*** 0.003*** 0.004*** 0.004***
(0.001) (0.001) (0.001) (0.001) (0.001) (0.001)
CEO compensation 0.040* 0.036* 0.037* 0.033* 0.031* 0.040*
(0.029) (0.028) (0.028) (0.027) (0.026) (0.029)
Board size
0.007
0.010
0.009
0.010
0.009
0.011
(0.010) (0.010) (0.010) (0.010) (0.010) (0.010)
Independence
0.492*
0.654*
0.674*
0.633*
0.690*
0.669*
(0.401) (0.401) (0.402) (0.401) (0.402) (0.402)
Firm age 0.025 0.024 0.024 0.025 0.025 0.023
(0.028) (0.028) (0.028) (0.028) (0.028) (0.028)
Firm size 0.260*** 0.267*** 0.266*** 0.267*** 0.271*** 0.266***
(0.031) (0.033) (0.031) (0.033) (0.032) (0.033)
Concentration
0.621**
0.622**
0.621**
0.620**
0.602**
0.656**
(0.274) (0.273) (0.273) (0.273) (0.273) (0.273)
SOE 0.165 0.146 0.144 0.145 0.153 0.140
(0.188) (0.187) (0.187) (0.187) (0.187) (0.187)
ROA 0.511* 0.462* 0.465* 0.450* 0.461* 0.473*
(0.275) (0.274) (0.274) (0.274) (0.274) (0.274)
LEV 0.132*** 0.131*** 0.130*** 0.129*** 0.128*** 0.128***
(0.013) (0.013) (0.013) (0.013) (0.013) (0.013)
CEO_poverty 0.479*** 0.318* 0.678*** 0.451*** 0.418***
(0.085) (0.160) (0.146) (0.086) (0.088)
Higher education
0.878*
0.470
0.435
0.973*
(0.524) (0.467) (0.462) (0.525)
Horizontal gap 0.170 0.170 0.102 0.072
(0.109) (0.109) (0.149) (0.151)
CEO_poverty  higher education
0.125**
0.117**
(0.057) (0.053)
CEO_poverty  horizontal gap 0.483** 0.467**
(0.207) (0.208)
Year fixed effect Y Y Y Y Y Y
Firm fixed effect Y Y Y Y Y Y
Constant
6.586***
6.874***
6.791***
6.747***
6.633***
6.931***
(0.862) (0.867) (0.864) (0.866) (0.863) (0.864)
Observations 7372 7372 7372 7372 7372 7372

Note: The standard errors clustered at the firm level.

Abbreviations: LEV, leverage ratio; ROA, return on assets.
***Significance at the 1% level. **Significance at the 5% level. *Significance at the 10% level.
DU and REN 9

important for CEOs to demonstrate their competence by maximizing reverse measurement indicator. The results are still robust, as shown
corporate effectiveness within a limited tenure (Pandher, 2022), and in Columns 1 to 2 of Table 5.
hence, when faced with conflicting environmental and economic In addition, drawing upon the research by Walker and Wan
goals, CEOs with poverty experiences will be more inclined to achieve (2012), we measure symbolic environmental efforts by subtracting the
economic goals by sacrificing environmental goals. In addition, we percentage of environmental investment relative to the firm's
take environmental scores from Hexun (http://www.hexun.com/) as a operating income from the percentage of the environmental
section in its CSR report. The CSR report is an annual document
released by a firm to its stakeholders, including customers, the public,
and government entities, in accordance with its commitments to
TABLE 3 The results on difference-in-differences model.
social responsibility and sustainable development. This report serves
Variables (1) (2) as a means to document and showcase the firm's performance and
Tutnover1*Post1 0.645** efforts in the realms of environment, society, and economics (Franco
(0.258) et al., 2020; Morea et al., 2023). If the result is greater than 0, it is
Tutnover2*Post2
0.537** coded as 1, suggesting that a firm's environmental investment is
(0.217) largely nominal with little substantive effort; otherwise, it is coded as

Controls Y Y 0. In our context, CEOs with a history of poverty tend to focus

exclusively on relentlessly building a more robust business empire.
Year fixed effect Y Y
Consequently, they are more likely to make symbolic rather than
Firm fixed effect Y Y
substantive efforts toward environmental issues. As indicated in the
N 980 952
third column of Table 5, the coefficient is significantly positive,
Note: The standard errors clustered at the firm level. implying a positive impact of a CEO's poverty experience on the firm's
**Significance at the 5% level.
symbolic environmental efforts.

TABLE 4 Alternative measures of CEO poverty experience. 5.4.3 | Alternative regression models
Variables (1) (2) (3)
CEO poverty 1 0.571*** To test whether the impact of CEOs' poverty experience on violations
is independent of different evaluation methods, we perform an
(0.089)
alternative approach. We recode the violations as dummy variables. If
CEO poverty6–12 0.309***
the firm engages in violations, it is coded as 1, regardless of its specific
(0.075)
number. If it does not have a violation record, it is coded as 0. We use
CEO poverty13–18 0.383***
the Logit model. The result is still robust, as shown in Column 4 of
(0.087)
Table 5.
Controls Y Y Y
Year fixed effect Y Y Y
Firm fixed effect Y Y Y 6 | DI SCU SSION AND CO NCLUSIO N
Observations 7372 7372 7372

Note: The standard errors clustered at the firm level.

This study investigated the relationship between CEOs' early-life
***Significance at the 1% level. poverty experience and firms' environmental violations. We argue

TABLE 5 Other robustness checks.

Variables (1) (2) (3) (4)

CEO_poverty
0.288***
0.115** 0.079** 0.339***
(0.069) (0.051) (0.032) (0.101)
Controls Y Y Y Y
Year fixed effect Y Y Y Y
Firm fixed effect Y Y Y Y
Observations 7372 7372 7372 7372

Note: Columns 1 to 3 report the alternative measure of the violations by green innovation, environmental scores, and symbolic environmental efforts. And
column 4 reports the results of alternative regression models. The standard errors clustered at the firm level.
**Significance at the 5% level. ***>Significance at the 1% level.
10 DU and REN

that CEOs' poverty imprint helps channel managerial attention to a throughout their lives, continually exerting their effects. Our
firm's economic goal domain, because CEOs re-evaluate their life investigation explores how poverty-related imprints augment feelings
priorities and pursue firms' performance rather than environmental of stress, prompting CEOs to reassess firm goal priorities. By revealing
responsibility, thus manifesting the tendency to engage in environ- how a CEO's early cognitive imprints perpetually impact the firm's
mental violations. In addition, we find that the positive effect of CEOs' behavior, our study contributes to the amalgamation of the upper
poverty imprint on environmental violations is weaker among well- echelons theory and the imprinting theory.
educated CEOs. And the positive effect of CEOs' poverty imprint on Thirdly, the extent of imprinting extinction is an important but
environmental violations will be strengthened for firms with greater understudied issue (Marquis & Qiao, 2020). We further enriched the
horizontal performance gaps. imprint developing process by examining moderating factors.
Specifically, higher education can erode the impact of the CEO
poverty imprint and reduce the insecurity and existential threat
6.1 | Theoretical implications associated with the poverty experience. In contrast, the horizontal
performance gap of the firm has the potential to evoke the CEO's
Our theoretical contributions are threefold. Firstly, this study extends poverty imprint and amplify the feelings of stress and existential
the existing upper echelons literature by examining the effect of threat, resulting in more violations.
CEOs' early life experiences influence on environmental decisions.
Despite that research investigating the effects of CEO career
experiences has yielded substantial insights, the ramifications of 6.2 | Policy and managerial implications
early life experiences remain largely underexamined (O'Sullivan
et al., 2021). On the one hand, a substantial number of scholars have The study's findings have implications for firms and governments.
embarked on studies concerning the impact of demographic charac- With the increasing emphasis of society on the sustainable
teristics of CEOs on firm environmental behavior, such as education development goals of firms (Rosso et al., 2022), our findings
experiences (Amore et al., 2019; Lewis et al., 2014), military underscore the crucial role of CEO's cognitive preferences in shaping
experiences (Benmelech & Frydman, 2015; Gao et al., 2021), and environmental decisions. For instance, a CEO imprinted by poverty
foreign experiences (Quan et al., 2021; Wang et al., 2022). On the might display hyper-aggressiveness or display disregard for the firm's
other hand, some scholars have also examined the influence of polluting actions on societal well-being. While such a stance might
executives on environmental decision-making from the perspective of foster short-term success, it may be detrimental to the long-term
CEOs' cognitive and psychological traits, for instance, early-life home- sustainability of the firm. Hence, corporations might find it beneficial
town experiences (Du et al., 2022; Ren et al., 2021) and early-life trau- to tie environmental performance evaluations to managerial
matic experiences (Li et al., 2023; O'Sullivan et al., 2021). Our performance, thereby encouraging managerial focus on sustainability
research further elucidates why early experiences of poverty by a issues.
CEO would generate negative impacts on a firm's environmental From a governmental standpoint, acknowledging the potentially
performance. Our study proposes moving beyond conventional adverse psychological impacts of poverty experience (e.g., an
demographic variables (such as educational background or tenure) and increased propensity for violation) is crucial, necessitating height-
considering how early experiences of poverty can affect executives' ened endeavors to alleviate poverty. Governments should be partic-
cognition and decision-making priorities. ularly vigilant about the mental health issues afflicting impoverished
Although several studies explore the impact of CEOs' poverty children, necessitating not just financial aid but also access to
experience on firm outcomes. Han et al. (2022) and Xu and Ma (2021) resources like education that can mitigate the impact of adverse
focus particularly on how CEOs' poverty experience shapes their psychological factors on their development. Concurrently, govern-
empathy. Zhang et al. (2022) linked the poverty experience with risk ments should strengthen their regulatory mechanisms, as underper-
decision-making. Our research focused on how that poverty forming firms are more likely to seek profits through environmental
experience increased the pressure felt by CEOs to influence their transgressions.
firms' decision-making priorities. We enrich this stream of literature
by revealing how CEOs' cognitive preferences play a role in conflict
decision-making situations. 6.3 | Limitations and future research directions
Secondly, our work expands upon the understanding of the
imprinting influence process by demonstrating how the life imprints First, future research could use surveys and questionnaires to
resulting from CEOs' early experiences with poverty can shape measure. Because we are based on the data of listed firms, we
priority setting in firm decision-making. Marquis and Qiao (2020) can use a combination of second-hand data and questionnaires in
underscored our limited knowledge on the imprint transfer process. the future research. Also, we only consider the moderating factor
Despite the dramatic transitions that CEOs experience from of higher education characteristics, and future research could
impoverished childhoods to positions of corporate prominence, the also consider social experience and other cognitive manager
ideological imprints derived from early growth experiences persist characteristics.
DU and REN 11

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