Ex‐military Top Executives and Corporate Violations: Evidence from China

We examine the association between corporate violations and executives who formerly served in the military, using a sample of A-share listed firms in China from 2004 to 2018. We find that firms led by ex-military executives are less likely to incur corporate violations. Further tests indicate that where there is a negative relationship this association is more pronounced for non-financial corporate violations than for cases involving financial fraud. We also confirm that the association between corporate misconduct and firms with ex-military executives is more significant if the firm has insufficient external oversight. The results are robust to a series of robustness tests. Overall, our results suggest that executives’ exposure to military culture has a governance effect in regulating corporate behaviour and outcomes in emerging economies.