On the role of foreign directors: Evidence from cross-listed firms |
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| Affiliation: | 1. Accounting Department, School of Management, Xiamen University, Xiamen, Fujian 361005, China;2. Xiamen National Accounting Institute, Xiamen, Fujian 361005, China;1. University of South Dakota, Department of Accounting & Finance, Beacom School of Business, 414 East Clark Street, Vermillion, SD 57069, United States of America;2. University of Texas Rio Grande Valley, Department of Economics & Finance, Robert C. Vackar College of Business & Entrepreneurship, 1201 W. University Drive, Edinburg, TX 78539, United States of America;3. East Carolina University, Department of Finance, College of Business, 1001 East 5th Street, Greenville, NC 27858, United States of America |
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| Abstract: | ![]()
We examine the determinants of appointment of U.S. independent directors (USIDs), and their impact and effectiveness, on the boards of cross-listed foreign firms versus non-cross-listed firms. For non-cross-listed firms, significant determinants of USID presence include factors related to both advising and monitoring roles, whereas for cross-listed firms, appointment of USIDs are related to monitoring factors. We find that USIDs have a significantly positive impact on cross-listed firms’ value, especially for firms from countries that are culturally and institutionally different from U.S. and countries with weak investor protection. The positive value effect is strongest for firms in which USIDs serve on governance committees. We also find that cross-listed firms with UISDs are better at acquiring both domestic and cross-border targets and have higher CEO turnover sensitivity. For non-cross-listed firms, USIDs have negative or no impact on value. |
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| Keywords: | Cross-listing Independent director Foreign director Monitoring |
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