The Behavioral Theory of the Firm suggests that performance below aspirations triggers problemistic search that can lead to risk taking. This prediction has received empirical support from most studies on the topic. However, this literature has typically focused on the internal determinants of...

This study examines whether firms’ financial fraudulent behavior varies when local firms are led by nonlocal CEOs. Building on the social identity theory, we argue that nonlocal CEOs, due to their different location-based social identities, are perceived as outgroup leaders and face intergroup...