Expatriate Managers: Effects on Firm Performance

Miklós Koren and Álmos Telegdy

October 2023


Using a novel dataset based on exhaustive administrative data from Hungary on firms and their managers for 1985--2018, we study the impact of expatriate Chief Executive Officers (CEOs) on firm outcomes. To reduce the bias arising in the selection process of hiring new CEOs, we use foreign acquisitions replacing the incumbent CEO with a local manager as a comparison group. Relative to firms that hire local managers, expatriate CEO hiring took place in firms that are smaller and have less intangible assets, but are more export oriented. Expatriate CEOs increase tangible assets by 9 and intangibles by 11 percent, export orientation by 6 percentage points and TFP by 5 percent relative to firms that hired a local manager, suggesting that they are better managers than locals.