Does a founder’s cultural imprint affect corporate ESG performance?

This study examines the effect of the cultural imprint of a founder on the Environmental, Social and Governance (ESG) performance of their firm. We conjecture that areas that experience frequent flooding disasters, such as the flood region along the Yellow River, can cultivate a unique culture. Cultural imprints may affect the attitude of founders toward risks and thus their corporate operation decisions. By using the historical flood records of each province at the county level from the China Meteorological Disaster Report, we find that the cultural imprint of founders of frequent floods is associated with improved ESG performance for their firms. Further analyses indicate that firms with a founder with a cultural imprint of frequent floods exhibit superior internal controls, which can contribute to improvements in their overall ESG and environmental performance. The cross-sectional analyses suggest that the impact of a cultural imprint of frequent floods is highly pronounced for founders without political connections and founders who established their firm in their hometown. Our study makes significant contributions by extending upper echelons theory and imprinting theory, and providing new insights into the impact of cultural background on corporate ESG performance.