Board Chair's Hometown Identity and Corporate Environmental, Social, and Governance Performance

ABSTRACT We explore the link between the board chair's hometown identity and corporate Environmental, Social, and Governance (ESG) performance. We also investigate how top management team (TMT) diversity may mitigate this relationship. While existing literature has shed light on the predictable variations of executives with different characteristics in determining corporate ESG practice, the role of executives' hometown identity—defined as the sentimental bond linking executives to their hometown—in corporate ESG performance remains unclear. Using a sample of 6,020 firm‐year observations of Chinese A‐share listed firms from 2009 to 2021, we find that the board chair's hometown identity significantly enhances corporate ESG performance, and the TMT diversity significantly weakens the positive relationship. Further tests show that the main effect is achieved by reducing managerial myopia and alleviating financing constraints. Both relationship‐related and task‐related diversity have significant mitigating effects on the main conclusion, and enhanced ESG performance improves corporate reputation. When the firm is state‐owned and its board chair hails from an area with a strong clan culture and balanced demographics, the hometown identity effect tends to be more pronounced. By integrating social identity theory with upper echelons theory, this study offers novel insights into how individual backgrounds shape organizational strategies.