Abstract
We investigate whether having a CEO with an international background affects U.S. firms’ cross-border merger and acquisition (M&A) activities. By defining international background as having either non-U.S. nationality, overseas education, or foreign work experience, we provide robust evidence that when a CEO possesses these characteristics, a firm is more likely to acquire international targets, and these deals are more value-enhancing. Moreover, our results indicate that when a firm’s CEO has all of these international characteristics (compared to just one), both the likelihood of cross-border deals and announcement returns increase. The observed gains are related, at least in part, to CEOs with this background being associated with lower acquisition premium and mitigating the negative impact of paying for these deals with equity.
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