Whereas some economic theories believe CEOs prioritize the long-term interest of the firm when engaging in acquisitions, others suggest CEOs pursue acquisitions to increase personal wealth, even if at the expense of shareholders.

J. Jay Choi and his co-authors empirically examined the motivations of CEOs when engaging in international acquisitions.

Research found that acquisitions were generally tied to immediate compensation increases for CEOs. Furthermore, the acquisition of complex targets, such as firms that were international, from different industries or larger in size, all led to greater differences in CEO compensation.

Choi’s research encourages board members to scrutinize motives behind CEO-backed international acquisitions and to work towards realigning shareholder and manager interests.