Chinese society is transitioning from traditional patrilineal norms toward egalitarian family relations. This study aims to investigate whether and under what conditions chief executive officers (CEOs) with new compound surnames, a micro-level cultural signal of this transition, are associated with corporate cash holdings.
Using 33,154 firm-year observations from Chinese A-share firms during 2003–2022, the authors estimate panel regressions with firm and year fixed effects, conduct endogeneity analyses and robustness checks and examine the moderating role of CEOs’ early-life social environment on corporate governance.
Firms led by CEOs with new compound surnames hold significantly less cash, especially when cash is excessive. The effect is attenuated for CEOs raised in less socially modernized regions and is more pronounced in firms with weaker governance, suggesting a substitution between informal norms and formal monitoring.
The findings have implications for investors’ assessment of governance risk and for policymakers’ understanding of the economic consequences of social norm changes.
This study extends research on informal institutions by introducing a cultural proxy for family of origin norms and linking early-life socialization to corporate financial outcomes.
