Mario Daniele Amore (Bocconi University); Morten Bennedsen (University of Copenhagen); Birthe Larsen (Copenhagen Business School); Maithili Modi (London School of Economics and Political Science)
Abstract
Using Danish administrative records combined with large-scale survey data, we ex- amine how CEO proximity, defined as geographic closeness to company operations and alignment in personal values, shapes the quality of workplaces. Firms led by “neigh- borhood CEOs” demonstrate significantly better working environments, as reflected in regulatory inspection results and employee perceptions. Our causal identification strategy exploits within-firm variation in CEO proximity across different plants, controlling for headquarters influence and plant-level differences in workforce skills. Employee surveys reveal that neighborhood CEOs exhibit stronger soft leadership skills, particularly in engagement, communication, and integrity, while their structured management practices do not differ significantly. We propose that neighborhood proximity fosters social interactions with employees, and we support this channel by showing that working environments further improve when CEOs and employees’ children attend the same school. Finally, we show that firms led by neighborhood CEOs report higher profitability, suggesting that enhanced employee welfare aligns with shareholder value.