If the CEO is a Neighbor, Working Conditions Are Better

A scholarly article about CEOs next door earned Mario Daniele Amore the Best Paper Award at the ICGS Conference 2022 (Miami, November 12, 13), by the International Corporate Governance Society.

In his "Neighborhood CEOs" (with Morten Bennedsen, INSEAD, and Birthe Larsen, Copenhagen Business School), Amore, a Full Professor at Bocconi Department of Management and Technology, shows that "firms led by neighborhood CEOs – defined by physical distance and personal values - exhibit better workplace conditions as perceived both by a regulatory authority and firms' own employees."

Using rich register and survey data from Denmark, Professor Amore and his co-authors were able to measure both the physical distance between a CEO's residence and the firm's location, and a CEO's cultural affinity with their local community. They measured the quality of work environment in two ways: through the number of administrative remarks addressed to the firm by the Danish Working Environment Authority and a comprehensive survey to employees.

It turned out that a CEO's place of residence (but not the place of birth) is positively correlated to the quality of the work environment.

"Since we believed that the effect is driven by social interactions, but we could not measure them, we resorted to a proxy: the overlap between the schools attended by a CEO's and their employees' children. Results confirm that the working environment improves when there is school overlap, as well as when a CEO displays high attachment to local cultural values," Amore said.

"Neighborhood CEOs" was considered the best paper among about 100 submissions.

ICGS is a nonprofit, educational organization formed to provide an academic forum for corporate governance scholars that enhances research, teaching, and consulting on corporate governance systems, practices, and outcomes throughout the global economy.