Board structure of immigrant-founder firms

Abstract

Using a sample consisting of 1212 firm-year observations made up of Fortune 500 firms and their matching firms from 1997 to 2013, we investigate both the corporate governance structures of firms with at least one founder who migrated to the United States and motivation for such migrants to set up businesses in the United States instead of their native countries. We find the boards of firms with at least one immigrant founder to have statistically meaningful differences from boards of firms without any immigrant founder. Such boards tend to be both smaller and more independent and are more likely to be headed by chairmen who are not Chief Executive Officers (CEOs). We also find strong evidence that migrants are more likely to establish businesses in the United States the lower their home countries score on political stability, rule of law, control of corruption and accountability public institutions as measured by the World Bank’s World Governance Indicators (WGI).