Transporting Transparency: Director Foreign Experience and Corporate Information Environment

28th Annual Conference on Financial Economics and Accounting

Journal of International Business Studies, Forthcoming

51 Pages Posted: 1 Jul 2016 Last revised: 8 Nov 2021

See all articles by Guanmin Liao

Guanmin Liao

Renmin University of China - School of Business

Mark (Shuai) Ma

University of Pittsburgh - Katz Graduate School of Business

Xiaoyun Yu

Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF); European Corporate Governance Institute (ECGI); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER); China Academy of Financial Research (CAFR)

Date Written: November 6, 2021

Abstract

Using hand-collected data and exploiting a natural experiment in China, we show that directors with foreign experience improve corporate transparency in emerging markets. The positive effect of these directors manifests itself if their experience originates from countries with high disclosure quality, if they reach a critical mass at the board, or if they serve on the audit committee. When exploring potential channels, we find that earnings transparency and voluntary disclosure increase after firms hire directors with foreign experience. Furthermore, once directors without such experience begin interacting with these savvy individuals, they are more likely to dissent on management proposals; transparency also propagates to other firms with which they hold board seats. These findings highlight the role of board diversity in shaping transparency and facilitating governance transfer within boardrooms and across firms.

Keywords: Foreign experience, corporate transparency, board of directors, board diversity, returnees, international human capital

Suggested Citation

Liao, Guanmin and Ma, Mark (Shuai) and Yu, Xiaoyun, Transporting Transparency: Director Foreign Experience and Corporate Information Environment (November 6, 2021). 28th Annual Conference on Financial Economics and Accounting, Journal of International Business Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2803195

Guanmin Liao

Renmin University of China - School of Business ( email )

No. 59 Zhongguancun Street, Haidian District
Beijing, Beijing 100872
China

Mark (Shuai) Ma (Contact Author)

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

Xiaoyun Yu

Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF) ( email )

Shanghai Jiao Tong University
211 West Huaihai Road
Shanghai, 200030
China

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

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