Doing Good Business by Hiring Directors with Foreign Experience

59 Pages Posted: 27 Nov 2015 Last revised: 31 Jan 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: November 21, 2016

Abstract

Using a manually collected dataset on the overseas experiences of directors of Chinese listed firms, we examine the effects of returnee directors on firms’ corporate social responsibility (CSR) engagement. Our results show that returnee directors significantly improve their firms’ CSR engagement. The positive relationship between the percentage of returnee directors and CSR engagement is more significant when a firm is in a competitive industry, when a firm has no government ownership, when a firm’s CEO is not politically connected, and when a firm’s CEO is older. Furthermore, we find that only long-term foreign professional or academic experience matters, whereas short-term visiting experience does not. Finally, our results are robust after controlling for endogeneity. Therefore, this paper offers clear policy implications by suggesting that hiring more returnees as corporate directors is an efficient way to enhance firms’ CSR, which may be of particular interest to regulators in emerging markets.

Keywords: Corporate social responsibility, Returnee directors, China

JEL Classification: M14

Suggested Citation

Zhang, Jian and Kong, Dongmin and Wu, Ji (George), Doing Good Business by Hiring Directors with Foreign Experience (November 21, 2016). Journal of Business Ethics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2694296 or http://dx.doi.org/10.2139/ssrn.2694296

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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