The Cultural Origin of CEOs’ Attitudes Towards Uncertainty: Evidence from Corporate Acquisitions

81 Pages Posted: 16 Jun 2017 Last revised: 22 May 2019

See all articles by Yihui Pan

Yihui Pan

University of Utah - Department of Finance

Stephan Siegel

University of Washington - Michael G. Foster School of Business; CESifo

Tracy Yue Wang

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: May 2019

Abstract

We examine the role of cultural heritage in shaping U.S. CEOs’ attitudes towards uncertainty, in the context of their corporate acquisition decisions. We find that CEOs with a more uncertainty avoiding cultural heritage are less likely to engage in acquisitions. Conditional on making an acquisition, uncertainty-averse CEOs prefer targets in familiar industries and targets that can be more easily integrated. The emphasis on cultural identity by CEOs’ parents and the ethnic composition of CEOs’ early life environment significantly influence the cultural transmission process. Cultural differences with respect to uncertainty attitudes persist over multiple generations, but become less pronounced over time.

Keywords: culture, cultural heritage, uncertainty avoidance, uncertainty aversion, Hofstede, CEO, corporate acquisition, social transmission of preference

Suggested Citation

Pan, Yihui and Siegel, Stephan and Wang, Tracy Yue, The Cultural Origin of CEOs’ Attitudes Towards Uncertainty: Evidence from Corporate Acquisitions (May 2019). Available at SSRN: https://ssrn.com/abstract=2987623 or http://dx.doi.org/10.2139/ssrn.2987623

Yihui Pan

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

Stephan Siegel (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

HOME PAGE: http://faculty.washington.edu/ss1110/

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Tracy Yue Wang

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
287
rank
103,287
Abstract Views
1,111
PlumX Metrics