Board Directors with Foreign Experience and Stock Price Crash Risk: Evidence from China
27 Pages Posted: 27 May 2020
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Board Directors With Foreign Experience and Stock Price Crash Risk: Evidence From China
Date Written: October/November 2019
Abstract
This study examines the impact of board directors with foreign experience (BDFEs) on stock price crash risk. We find that BDFEs help reduce crash risk. This association is robust to a series of robustness checks, including a firm fixed effects model, controlling for possibly omitted variables, and instrumental variable estimations. Moreover, we find that the negative association between BDFEs and crash risk is more pronounced for firms with more agency problems, weaker corporate governance, and less overall transparency. Our findings suggest that the characteristics of board directors matter in determining stock price crash risk.
Keywords: board directors, foreign experience, monitoring role, stock price crash risk
JEL Classification: G34, G38
Suggested Citation: Suggested Citation
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