Published In

University of Oregon Economics Department Working Papers

Document Type

Working Paper

Publication Date



Foreign investments, Chief executive officers, International business enterprises, Corporate governance


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 from1992 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 25 and 40%, 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.


Copyright 2003 National Bureau of Economic Research. Available at

* At the time of publication Rossitza B. Wooster was affiliated with the California State University, Sacramento

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