CEO Turnover and Foreign Market Participation

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.

Equity Commitment under Uncertainty: A Hierarchical Model of Real Option Entry Mode Choices

We develop a real option hierarchical model of entry mode choice and test predictions using a sample of US companies in Latin America and the Caribbean between 1980 and 2005. Probit results indicate that the choice between a real option non-equity mode and equity commitment is influenced by previous acquisition experience, R&D and advertising intensities, and country risk. The choice of the more flexible real option JV mode over WOEs is positively related to greater firm size and market-to-book ratio in countries with better infrastructure. In contrast, greater marketing intensity and lower country risk encourage WOEs

Crime, Institutions and Sector-Specific FDI in Latin America

In this article, we explore how crime and institutions affect the flow of capital in the form of foreign direct investment (FDI) to Latin American and Caribbean countries in the primary, secondary and tertiary sectors during the 1996-2010 period. We use three different variables related to violent crime: homicides, crime victimization, and an index of organized crime. We find that there is a correlation between the institutional and crime variables, where the significance of institutional variables tends to disappear when the crime variables are added to the model. We find that higher crime victimization and organized crime are associated with lower FDI in the tertiary sector. We do not find that crime affects FDI inflows to Latin America in the primary and secondary sector

Networking and Foreign Direct Investment Activity

We conduct an empirical investigation into whether networking effects affect foreign direct investment (FDI) activity. Using bibliographical information on CEOs’ birth and education locations, we are able to identify changes from U.S. to foreign-connected CEOs that occurred in U.S. manufacturing firms of the S&P 500 from 1992 through 1997. Robust to a variety of specifications, we find that a U.S. firm’s switch from a U.S.- to a foreign-connected CEO leads to substantial increases in the firm’s proportion of its assets and sales that are in foreign markets. In fact, our preferred specification indicates that foreign asset and sales proportions increase 30 and 50%, respectively, for the five years after such a CEO switch is made. 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

Networking and Foreign Direct Investment Activity

We conduct an empirical investigation into whether networking effects affect foreign direct investment (FDI) activity. Using bibliographical information on CEOs’ birth and education locations, we are able to identify changes from U.S. to foreign-connected CEOs that occurred in U.S. manufacturing firms of the S&P 500 from 1992 through 1997. Robust to a variety of specifications, we find that a U.S. firm’s switch from a U.S.- to a foreign-connected CEO leads to substantial increases in the firm’s proportion of its assets and sales that are in foreign markets. In fact, our preferred specification indicates that foreign asset and sales proportions increase 30 and 50%, respectively, for the five years after such a CEO switch is made. 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

Leadership Positioning Among U.S. Firms Investing in China

This study investigates leadership positioning by U.S. firms in China using the awareness, motivation, capability (AMC) perspective. We define leadership as first in industry to invest in China, and find that leaders have characteristics associated with higher AMC, evidenced by pre-existing multinational experience, higher product market orientation, smaller scale of operations, and higher input cost structure. Notably, the motivation to lower input costs and the prior capability in multinational operations mattered only for the first wave of firms leading industry investment earlier in time, while firms with smaller scale of operations exhibited a preference to lead investment in less popular provinces. Overall, these results provide a unique view on how AMC characteristics influence international investment decisions, suggesting that firms both strategically lead and strategically follow. In additional analysis, we examine how leaders and followers positioned themselves with respect to ownership, and find that leaders were more likely to choose entry modes that offered ownership control over flexibility, consistent with internalization theories

US companies in transition economies: wealth effects from expansion between 1987 and 1999

This study uses a unique sample to evaluate changes in shareholder wealth from announcements of expansion by US firms into 18 transition economies, through four entry modes, from 1987 to 1999. On average, expansion in transition economies is associated with significant positive wealth effects. Results show that value creation is most significantly associated with expansion through less risky entry modes into host countries that are in the more advanced stages of market liberalization and structural reform. Sample firms with lower profitability also experience significantly higher abnormal returns, while significant value creation documented for firms entering transition economies in 1989, 1990, and 1992 suggests first-mover advantages. Journal of International Business Studies (2006) 37, 179–195. doi:10.1057/palgrave.jibs.8400187

CEO Turnover and Foreign Market Participation

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 CEO's 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

CEO turnover and foreign market participation

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

Settling the Smoke: Public Policy and Shareholder Wealth in the Cigarette Industry

This article uses daily data on stock returns of five U.S. publicly traded cigarette producers to document the wealth effects of antismoking policies initiated in the period 1964 to 1971. The authors find significant abnormal returns across 23 dates corresponding to important regulatory events. The second-stage estimation shows that wealth effects are also influenced by firm characteristics, such as market share, advertising intensity, percentage of sales of filter-tip cigarettes, percentage of advertising expenditures devoted to TV and radio, and tobacco leaf inventories. Overall, the article estimates that industry losses from antismoking policies amounted to approximately $1.5 billion. (JEL "L66", "G14", "I18") Copyright 2005 Western Economic Association International.