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Mitigating Negative Spillovers from Categorization of Foreign-Listed Firms: The Role of Host-Country Independent Directors

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  • Kang, Eugene
  • Chintakananda, Asda

Abstract

This study examines how cognitive categorization by host-country investors give rise to negative spillovers among host-country foreign-listed firms from the same home country when one of these foreign-listed firms discloses a financial reporting irregularity. This study further examines how attributes of host-country independent directors mitigate such negative spillover effects through signaling fulfilment of their fiduciary duties. Our results based on Chinese foreign-listed firms on the Singapore Stock Exchange from 2007–2014 reveal that host-country independent directors increase spillover effects among foreign-listed Chinese firms from financial reporting irregularities. However, such increase is attenuated when these directors signal fulfilment of their fiduciary duties through home-country, industry, or task-related experiences, and the observed mitigating effect is stronger when they possess a combination of these experiences.

Suggested Citation

  • Kang, Eugene & Chintakananda, Asda, 2019. "Mitigating Negative Spillovers from Categorization of Foreign-Listed Firms: The Role of Host-Country Independent Directors," Management and Organization Review, Cambridge University Press, vol. 15(4), pages 773-807, December.
    • Handle: RePEc:cup:maorev:v:15:y:2019:i:4:p:773-807_6
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    Cited by:

    1. Eugene Kang & Nguyen Bao Lam, 2023. "The impact of environmental disclosure on initial public offering underpricing: Sustainable development in Singapore," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 119-133, January.

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