Managerial Foreign Experience and Corporate Risk-Taking: Evidence from China

Abstract

This study investigates the relation between managerial foreign experience and corporate risk-taking in China. We find that foreign experienced managers are positively associated with corporate risk-taking and this relationship mainly exists in private firms rather than in state owned enterprises (SOEs). The positive association is more pronounced for executives who gain their foreign experience from countries with advanced management practices and for foreign practical experience rather than educational experience. Short-term visiting experience has no impacts on corporate risk-taking. The positive relationship between managerial foreign experience and corporate risk-taking in private firms is more persistent among firms with more resources, better corporate governance or weak external environments and monitoring. Finally, evidence shows that risk-taking executives with foreign experience are more likely to enhance firm value and performance.

Keywords: Managerial foreign experience, Risk-taking, Corporate governance

JEL Classification: G32, G34, G38, L33