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

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

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

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.

Original languageEnglish
Pages (from-to)483-503
Number of pages21
JournalJournal of Financial Economics
Volume138
Issue number2
DOIs
StatePublished - Nov 2020

Keywords

  • Advisory role
  • Board structure
  • China-related experience
  • Director labor market
  • Permanent normal trade relations

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