Mitigating the dual liability of newness and foreignness in capital markets: The role of returnee independent directors

Weiwen Li, Garry D. Bruton and Igor Filatotchev

Journal of World Business, 2016, vol. 51, issue 5, 787-799

Abstract: Foreign firms undergoing an initial public offering in developed economies face a dual liability of newness and foreignness that can negatively impact the firm’s ability to access capital. In this study, we examine the ability of returnee independent directors to overcome such a liability among 232 foreign listings in the U.S. We find that returnee independent directors positively impact the price premium of the foreign IPO. We also find that this relationship is contingent on the level of ownership retained by non-independent directors, the level of ownership retained by venture capitalists, and investor protection in the firm’s country of origin.

Keywords: Returnee independent directors; Liability of newness; Liability of foreignness in capital markets; Investor protection (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:worbus:v:51:y:2016:i:5:p:787-799

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DOI: 10.1016/j.jwb.2016.06.004

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