Exemplary Outsiders? Immigrant CEOs and Financial Misrepresentation

We examine the role of CEOs' national origins on financial misrepresentation. Building on the economic theory of crime, we propose that, because immigrant CEOs are subject to more scrutiny and face more severe punishment in case of misconduct, immigrant CEOs will be less likely to misrepresent their firms’ financial results. We find evidence for this proposition for a sample of US-headquartered Information and Communications Technology firms that went public between 2000 and 2015. Specifically, we find that firms with an immigrant CEO have a lower likelihood of financial misrepresentation than native-led firms, particularly when immigrant CEOs are also their firm’s founders. Our paper contributes to research on corporate misconduct, immigrant entrepreneurship, and the broader discussion on the relationship between immigration and crime.