CEO Leadership, Inside Debt and Broad Framing of Risky Decisions: Evidence from Geographic Diversification in Serial Acquisitions

Abstract We investigate the strategic implications of CEO inside debt in the context of serial acquisitions by challenging the traditional view of inside debt as solely a risk‐curbing mechanism. Drawing on the choice‐bracketing theory, we argue that inside debt encourages CEOs to adopt a broad bracketing cognitive frame, evaluating acquisition sequences as an integrated portfolio rather than as isolated events, which in turn promotes greater international diversification. Using a sample of 1461 serial acquisitions by U.S. firms from 2006 to 2020, we find that CEOs with higher inside debt pursue greater international diversification, reflected in both depth (number of international acquisitions) and breadth (diversity of target regions) of acquisitions. This relationship is amplified when acquisitions occur in close succession and within family‐led firms, but is attenuated by high international exposure or market uncertainty. We contribute to the literature by revealing a novel cognitive pathway through which executive leadership and compensation shapes sequential decision‐making and long‐term organizational resilience.