CEO's poverty imprints and corporate financial fraud: Evidence from China

Abstract

Our research examines the potential influence of CEOs' childhood poverty experiences on corporate financial fraud. We employ upper echelon theory and imprinting theory to investigate how CEOs' childhood poverty imprint affects corporate financial fraud. Using data for Chinese publicly traded firms from 2011 to 2020, we discover that corporations with CEOs who experienced childhood poverty had a higher likelihood of engaging in financial fraud. Following the fraud triangle theory, we investigate moderating mechanisms affecting decay and the strength of poverty imprinting. Our findings suggest that CEOs' companies with poor performance reflect a weaker imprint, but CEO age and board independence diminish the positive impact of poverty imprinting on corporate financial fraud. The contributions of imprinting, the fraud triangle theory, and the literature on corporate financial fraud are also discussed.