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CEO Turnover and Foreign Market Participation

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  • Bruce Blonigen
  • Rossitza B. Wooster

Abstract

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.

Suggested Citation

  • Bruce Blonigen & Rossitza B. Wooster, 2003. "CEO Turnover and Foreign Market Participation," NBER Working Papers 9527, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:9527
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    Cited by:

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    2. Sergey Solntsev, 2013. "Senior management labor market: from economic growth to crisis. The case of Russia," HSE Working papers WP BRP 10/MAN/2013, National Research University Higher School of Economics.
    3. Salim Chahine & Samer Saade & Marc Goergen, 2019. "Foreign Business Activities, Foreignness of the VC Syndicate, and IPO Value," Entrepreneurship Theory and Practice, , vol. 43(5), pages 947-973, September.

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    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • G3 - Financial Economics - - Corporate Finance and Governance

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