Home Sweet Home: CEOs Acquiring Firms in their Birth Countries

56 Pages Posted: 3 Aug 2023

See all articles by Ron Shalev

Ron Shalev

University of Toronto - Rotman School of Management

Antonio Marra

Bocconi University - Department of Accounting

Angela Kate Pettinicchio

SDA Bocconi School of Management

Date Written: August 2, 2023

Abstract

We find that foreign-born CEOs are more inclined than domestic ones to acquire across borders, and that this inclination is explained by their preference for targets in their birth country. This preference is motivated by their information advantage in their birth country and by these CEOs’ desire to give back to the birth country. CEOs’ desire to benefit the birth country also influences target location, increasing the likelihood of a target in countries that colonized the CEO birth country. The motives that drive acquisitions in the acquirer CEOs’ birth country measurably affect the returns of acquirers’ shareholders, target premium, and acquisition synergy. Both acquirers’ returns and synergy but not target premium are abnormally positive when the motive for the acquisition is a CEO’s information advantage in the birth country. Targets premiums but not acquirers’ returns and synergy are abnormally positive when the motive for the acquisition is the desire to give back to the CEO’s birth country.

Keywords: Mergers and Acquisitions, Home Bias, Information Asymmetry, CEO Birth Country

JEL Classification: G14, G34, M41

Suggested Citation

Shalev, Ron and Marra, Antonio and Pettinicchio, Angela Kate, Home Sweet Home: CEOs Acquiring Firms in their Birth Countries (August 2, 2023). Available at SSRN: https://ssrn.com/abstract=4529634 or http://dx.doi.org/10.2139/ssrn.4529634

Ron Shalev (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Antonio Marra

Bocconi University - Department of Accounting ( email )

Via Roentgen 1
Milan, 20136
Italy

Angela Kate Pettinicchio

SDA Bocconi School of Management ( email )

Via Sarfatti 10
Milan, 20136
Italy

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
126
Abstract Views
410
Rank
421,845
PlumX Metrics