Topic: Globalizing the Boardroom - The Effects of Foreign Directors on Corporate Governance and Firm Performance
Presenter：Cong Wang，Assistant Professor, Department of Finance, Chinese University of Hong Kong
Time: April 16, 2010（Friday）3:00—4:30PM
Venue:Room 501, Jiageng Bld 2
Chair： Zhe Shen, assistant professor in finance, IFAS
Abstract：
In recent years, about 13% of large U.S. public corporations have foreign independent directors (FIDs) serving on their boards. Our evidence suggests that FIDs bring both benefits and costs to firms. Consistent with value added by FIDs through their international expertise, we find that firms with FIDs make better cross-border acquisitions when the targets are from the home regions of FIDs. However, indicative of FIDs’ monitoring deficiencies and adverse effect on corporate governance, we also find that FIDs display poor board meeting attendance records, and firms with FIDs on their boards tend to pay their CEOs excessively high compensation and are more prone to commit financial misreporting that requires future restatements. Our evaluation of the overall effect of FIDs on firm performance shows that firms with FIDs are associated with significantly poorer performance, especially when they do not have much business presence in their FID’s home region, but FIDs make increasingly larger contribution to firm performance as a firm’s operation in the FID’s home region becomes more important.
Presenter Introduction：
Prof. Wang got his BBA, MA and PhD from Beijing University, Nanyang Technology University and Vanderbilt University respectively. His Research Interest includes Corporate Finance, Mergers & Acquisitions and Corporate Governance.
Download paper：Foreign Directors .pdf