CEO wealth and cross-border acquisitions by SMEs

Abstract

This study examines the role of chief executive officers’ (CEOs) wealth in explaining the cross-border acquisition (CBA) activity of small and medium-sized enterprises (SMEs). CBAs require substantial financial resources and expose the firm to additional risks. Within a micro-foundations framework, we integrate insights from the resource-based view and the upper echelons theory and argue that CEO wealth plays a dual role in the CBA activity of SMEs by alleviating financial constraints and increasing willingness to take risks. Using Norwegian census data for the period 2000–2013, we find consistent evidence that CEO wealth has a positive effect on the number, the geographic scope, and the likelihood of engaging in CBAs in high political risk countries.