Returnee Directors and CEO Turnover-Performance Sensitivity

Xiaoxue Zhang

Emerging Markets Finance and Trade, 2025, vol. 61, issue 8, 2460-2474

Abstract: This study examines whether CEO turnover-performance sensitivity is associated with Chinese directors having returned from overseas. I find a significantly positive relationship between returnee directors and CEO turnover-performance sensitivity, and this positive relationship is more pronounced for returnee directors who obtained foreign experience in countries with stronger institutions and better corporate governance. By exploring possible moderating factors, the results indicate that the positive relationship can be influenced by critical mass, serving on the nominating committee, and provincial legal environment, but not by industry performance. Further analyses indicate that the positive relationship between returnee directors and CEO turnover-performance sensitivity has spillover effects. Finally, I find that CEO turnover announcement of firms with returnee directors generates more positive market reaction. This study particularly contributes to the board diversity, and highlight the role of returnee directors in CEO turnover-performance sensitivity.

Date: 2025
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DOI: 10.1080/1540496X.2024.2430497

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