The Cultural Origin of CEOs' Attitudes toward Uncertainty: Evidence from Corporate Acquisitions

Yihui Pan, Stephan Siegel, Tracy Yue Wang

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

We examine the role of cultural heritage in shaping U.S. CEOs' attitudes toward 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 about uncertainty attitudes persist over multiple generations, but become less pronounced over time. (JEL G34, G4, G40, G41)

Original languageEnglish (US)
Pages (from-to)2977-3030
Number of pages54
JournalReview of Financial Studies
Volume33
Issue number7
DOIs
StatePublished - Jul 1 2020
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2019 The Author(s) 2019. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved.

Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.

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