CEO Turnover and Foreign Market Participation
AbstractAnecdotal evidence suggests that new CEOs with foreign backgrounds direct their firms to become more international in their operations. We examine this hypothesis formally using data on U.S. S&P-500 manufacturing firms from 1992 through 1997 and biographical information on CEOs' birth and education locations that allow us to identify changes from U.S.- to foreign-connected CEOs. Robust to a variety of specifications, we find that a U.S. firm's switch from a U.S. to a foreign CEO leads to substantial increases in the firm's proportion of its foreign assets and foreign affiliate sales. In fact, our preferred specification indicates that foreign asset and affiliate sales proportions increase 30 and 50%, respectively, for the five years after there is CEO turnover to one with a foreign background. This is in contrast to U.S.-to-U.S. CEO switches in our sample that show no evidence of changes in a firms' foreign market participation. These large effects contrast with previous literature that finds little evidence for changes in firm performance with CEO turnover.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9527.
Date of creation: Mar 2003
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Other versions of this item:
- Bruce A. Blonigen & Rossitza B. Wooster, 2003. "CEO Turnover and Foreign Market Participation," University of Oregon Economics Department Working Papers 2003-24, University of Oregon Economics Department, revised 01 Mar 2003.
- F2 - International Economics - - International Factor Movements and International Business
- G3 - Financial Economics - - Corporate Finance and Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-03-03 (All new papers)
- NEP-CFN-2003-03-03 (Corporate Finance)
- NEP-COM-2003-03-03 (Industrial Competition)
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