A Multinational Study of Foreign Directors on Non-U.S. Corporate Boards
Mihail K. Miletkov
University of New Hampshire - Paul College of Business and Economics
Annette B. Poulsen
University of Georgia - Department of Banking and Finance
M. Babajide Wintoki
University of Kansas - School of Business
December 27, 2013
With the globalization of the world economy, firms can potentially benefit from the operating and governance expertise of foreign directors, but there may be significant direct and indirect costs associated with employing such directors. Further, these benefits and costs are likely to vary significantly across firms and countries. In this paper, we examine the distribution of foreign directors across firms in 80 countries outside the U.S. and the impact such directors have on firm performance. We find that foreign directors are more likely to be appointed by larger firms with foreign operations and in countries with fewer qualified domestic directors. We also find that the effect of foreign directors on firm operating performance is more positive in countries with lower levels of investor protection, in firms that engage in cross-border acquisitions, and when the director comes from a country with a higher level of investor protection than the firm's host country.
Number of Pages in PDF File: 51
Keywords: boards of directors, international governance, corporate governance
JEL Classification: G34, G30
Date posted: March 20, 2012 ; Last revised: January 9, 2014
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