CEO foreign work experience and CEO total compensation: the moderating effect of firm internationalization

This study investigates the association between CEO foreign work experience and CEO total compensation. The sample contains 863 observations from 2007 to 2016 from seven European countries. As certain aspects of foreign work experience are considered beneficial for the firm, it is likely that those who have worked abroad may appropriate some of the benefits themselves in the form of higher compensation. Contrary to the proposed positive association based on the resource-based theory, I find evidence that CEOs with foreign work experience receive significantly lower levels of total compensation compared to similar CEOs without foreign work experience, regardless of the diversity of their work experience. The results are robust to the endogenous CEO selection using a propensity-score matching method. The results show that the negative association between CEO foreign work experience and CEO total compensation is more pronounced for CEOs that are at the head of firms with a higher level of internationalization, measured as percentage of foreign sales. Managerial implications and suggestions for related future research are provided