Board of directors' foreign experience and stock price informativeness

Abstract

AbstractWe investigate the impact of board of directors' foreign experience on stock price informativeness from 2008 to 2016 in Chinese A‐share listed firms. The empirical findings suggest that board of directors' foreign experience has a positive and significant impact on stock price informativeness. By analysing the role of external monitoring factors, our results show that board of directors' foreign experience has a positive and significant impact on stock price informativeness in the absence of external monitoring factors such as audit quality, the cross‐listing of firms, and foreign ownership. Our findings are robust to the use of advanced techniques and the inclusion of instrumental variables. Overall, our study supports the resource dependency theory and the substitutional effect on the relationship between board of directors' foreign experience and stock price informativeness.