Learning from Directors’ Foreign Board Experiences
54 Pages Posted: 26 May 2017 Last revised: 20 Sep 2017
Date Written: August 23, 2017
We study the transfer of governance across countries through overlapping boards. Companies converge to the governance characteristics and board practices of foreign firms through their directors’ foreign board experiences. Learning from foreign firms’ governance practices is as important as learning from connected domestic firms, and increases with the number of directors with foreign board appointments. This learning is stronger in firms domiciled in less-developed governance markets, suggesting a potential channel through which better governance practices are propagated. Our results are also obtained when we use an exogenous shock to board practices, are present in the time series, and don’t exist in in placebo samples.
Keywords: Corporate Governance, Board Practices, Governance Convergence, Learning
JEL Classification: F30, G15, G34
Suggested Citation: Suggested Citation