Managerial foreign experience and corporate risk-taking: Evidence from China

Zixiong Sun, Hamish Anderson and Jing Chi

International Review of Financial Analysis, 2023, vol. 86, issue C

Abstract: This study investigates the relationship between managerial foreign experience and corporate risk-taking. We find that foreign experienced managers in Chinese firms are positively associated with corporate risk-taking and that this mainly exists in private firms rather than in state owned enterprises (SOEs). In privately owned firms, the degree of corporate internationalization and operating leverage are potential channels through which foreign experienced managers affect corporate risk-taking. Moreover, the positive association is more pronounced for managers' practical, rather than educational foreign experience and for managers who gain their foreign experience from countries or regions with advanced management practices and better corporate governance. Short-term visits overseas has no impact on corporate risk-taking. Additionally, the relationship is more persistent among private firms with better corporate governance and those operating in weak local economy. Finally, we find evidence that the risk-taking behaviour from foreign experienced managers is an important mechanism for companies to enhance their value.

Keywords: Managerial foreign experience; Corporate risk-taking; Ownership structure; China (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:86:y:2023:i:c:s1057521923000418

DOI: 10.1016/j.irfa.2023.102525

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