CEO Turnover and Foreign Market Participation / Bruce Blonigen, Rossitza B. Wooster.

Format:

Book

Author/Creator:

Blonigen, Bruce A. (Bruce Aloysius)

Contributor:

National Bureau of Economic Research.

Wooster, Rossitza B. (Rossitza Bouneva), 1971-

Series:

Working Paper Series (National Bureau of Economic Research) no. w9527.

NBER working paper series no. w9527

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

Anecdotal 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.

Notes:

Print version record

March 2003.