Home Sweet Home: CEOs Acquiring Firms in their Birth Country

We find that foreign-born CEOs are more inclined than domestic ones to engage in cross-border acquisitions, and that this inclination is explained by foreign born CEOs preference to acquire targets in their birth country. The preference to the birth country is explained by acquirers’ CEO information advantage in their birth country and by the desire to give back to the birth country. The desire to bring glory and pride to the birth country also plays a role in target location, with acquirer inclination to buy targets in countries that colonized CEO birth country in the past. The motives that drive acquisitions in the acquirers’ CEO birth country have a measurable effect on acquirers’ shareholders returns, target premium and acquisition synergy. Both acquirers’ returns and synergy, but not target premium are abnormally positive when the motive for the acquisition is CEO information advantage in her birth country. Targets premiums are abnormally positive when the motive for the acquisition is the desire to give back to the CEO birth country.