Being Good by Hiring Directors with Foreign Experiences

69 Pages Posted: 15 Aug 2015 Last revised: 6 Mar 2017

See all articles by Jian Zhang

Jian Zhang

Independent

Dongmin Kong

Department of Finance, Huazhong University of Science and Technology; School of Finance, Zhongnan University of Economics and Law

Ji (George) Wu

Massey University - School of Economics and Finance

Date Written: August 14, 2015

Abstract

Using a manually collected dataset on the overseas experiences of directors for Chinese listed firms, we examine effects of returnee directors on firms’ corporate social responsibility engagement (CSR). Our results show that returnee directors significantly improve firms’ CSR engagements. The significant positive relationship is more pronounced for firms in lower competitive industry, with high leverage ratios, with CEOs politically connected to the government, and with aged CEOs. Furthermore, we find that only returnee directors’ long-term foreign experience matters, such as education and working experience, but short-term visiting experience does not contribute to above findings. Finally, our results are robust after controlling for endogeneity. This paper thus offers clear policy implications by suggesting that hiring more returnees as management directors could be one efficient way to enhance firms’ CSR quality, which may be of particular interest to regulators in emerging markets.

Keywords: Corporate social responsibility, Returnee directors, China,

Suggested Citation

Zhang, Jian and Kong, Dongmin and Wu, Ji (George), Being Good by Hiring Directors with Foreign Experiences (August 14, 2015). Journal of Business Ethics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2644711 or http://dx.doi.org/10.2139/ssrn.2644711

Jian Zhang

Independent

Dongmin Kong

Department of Finance, Huazhong University of Science and Technology ( email )

Wuhan, Hubei 430074
China

School of Finance, Zhongnan University of Economics and Law ( email )

Wuhan, Hubei 430073
China

Ji (George) Wu (Contact Author)

Massey University - School of Economics and Finance ( email )

Private Bag 102904
North Shore
Auckland, Auckland 0745
New Zealand
+6292127089 (Phone)

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