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Globalizing the boardroom—The effects of foreign directors on corporate governance and firm performance

  • Masulis, Ronald W.
  • Wang, Cong
  • Xie, Fei

We examine the benefits and costs associated with foreign independent directors (FIDs) at U.S. corporations. We find that firms with FIDs make better cross-border acquisitions when the targets are from the home regions of FIDs. However, FIDs also display poor board meeting attendance records and are associated with a greater likelihood of intentional financial misreporting, higher CEO compensation, and a lower sensitivity of CEO turnover to performance. Finally, firms with FIDs exhibit significantly poorer performance, especially as their business presence in the FID's home region becomes less important.

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File URL: http://www.sciencedirect.com/science/article/pii/S016541011100098X
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Article provided by Elsevier in its journal Journal of Accounting and Economics.

Volume (Year): 53 (2012)
Issue (Month): 3 ()
Pages: 527-554

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Handle: RePEc:eee:jaecon:v:53:y:2012:i:3:p:527-554
DOI: 10.1016/j.jacceco.2011.12.003
Contact details of provider: Web page: http://www.elsevier.com/locate/jae

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