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Board directors with foreign experience and stock price crash risk: Evidence from China

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  • Feng Cao
  • Jian Sun
  • Rongli Yuan

Abstract

This study examines the impact of board directors with foreign experience (BDFEs) on stock price crash risk. We find that BDFEs help reduce crash risk. This association is robust to a series of robustness checks, including a firm fixed effects model, controlling for possibly omitted variables, and instrumental variable estimations. Moreover, we find that the negative association between BDFEs and crash risk is more pronounced for firms with more agency problems, weaker corporate governance, and less overall transparency. Our findings suggest that the characteristics of board directors matter in determining stock price crash risk.

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  • Feng Cao & Jian Sun & Rongli Yuan, 2019. "Board directors with foreign experience and stock price crash risk: Evidence from China," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 46(9-10), pages 1144-1170, October.
    • Handle: RePEc:bla:jbfnac:v:46:y:2019:i:9-10:p:1144-1170
    DOI: 10.1111/jbfa.12400
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