Board structure, director expertise, and advisory role of outside directors

Sheng-Syan Chen, Yan-Shing Chen, Jun-Koo Kang and Shu-Cing Peng

Journal of Financial Economics, 2020, vol. 138, issue 2, 483-503

Abstract: We investigate how a shock to corporate demand for experienced directors (i.e., U.S. Congress’ grant of Permanent Normal Trade Relations status to China in 2000) affects U.S. firms’ board structure and board advisory role. We find that firms appoint more outside directors with China-related experience after the grant. Firms with such directors realize higher returns around announcements of investments involving Chinese firms and better post-deal operating performance, particularly when these directors reside in the U.S. The appointment of directors with China experience is also greeted more positively by the stock market and they gain more board seats after the grant.

Keywords: Permanent normal trade relations; China-related experience; Board structure; Advisory role; Director labor market (search for similar items in EconPapers)
JEL-codes: G14 G32 G34 O24 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:138:y:2020:i:2:p:483-503

DOI: 10.1016/j.jfineco.2020.05.008

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