The Brain Gain of Corporate Boards: A Natural Experiment from China

Mariassunta Giannetti will be presenting:

The brain gain of corporate boards: A natural experiment from china

Authors

Mariassunta Giannetti, Stockholm School of Economics, CEPR, and ECGI

Guanmin Liao, School of Accountancy, Central University of Finance and Economics

Xiaoyun Yu, Department of Finance, Kelley School of Business, Indiana University

Abstract

We study the impact of directors with foreign experience on firms in emerging markets. To establish causality, we use a unique dataset from China and exploit that at different times, Chinese provinces introduced policies to attract highly talented emigrants. These policies led to an exogenous increase in the supply of Chinese individuals with foreign experience in the local labor market and ultimately increased the likelihood that firms in these provinces had directors with foreign experience in comparison to firms with a similarly high demand for these skills elsewhere.

We document that hiring directors with foreign experience results in higher firm valuation, productivity, and profitability. Furthermore, corporate governance improves and firms are more likely to make international acquisitions, to export, and to raise funds internationally. These results indicate that the transfer of knowledge to emerging markets occurs not only through foreign investment, but also through labor flows and, in particular, return migration.

View the full paper attached below.

For more information about Mariassunta Giannetti, please see here

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Nov. 20, 2012

Jaewon Choi, College of Business, University of Illinois (joint with FRIC)

On the fundamental relation between equity returns and interest rates

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Hongjun Yan, Yale School of Management (joint with FRIC)

Collateral-Motivated Financial Innovation

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