Abstract
Purpose: The article evaluates the associative relationship between international supervisory board experts and foreign ownership, along with the experts’ influence on the financial and operating performance of firms. The study was based on data collected for 257 companies listed on the Warsaw Stock Exchange in 2010–2015. Methodology: The dataset was built as a panel, and then generalized least squares regression models with a fixed or random effect were employed to test hypotheses. Findings: The findings of the study clearly show that the presence of investigated firms in foreign markets positively affects company performance. Moreover, models with dependent variables ROA and ROS show that supervisory board members with foreign experience positively affect profitability indicators of firms that do not operate on foreign markets. The data analyses reveal that international experts are more effective advisors for companies that conduct no business activities on foreign markets. Furthermore, the results show a positive moderate association between the share of international experts in supervisory boards and the share of foreign ownership in the company. Originality: The article contributes to the understanding of determinants and consequences of the presence of international experts in supervisory boards and company internationalization.
Highlights
In recent years, corporate governance is a very popular topic (Słomka-Gołębiewska and Urbanek, 2016; Dobija and Kravchenko, 2017; García-Sánchez et al, 2018; Joh et al, 2018; Kumar et al, 2018; Shin et al, 2018; Goergen and Tonks, 2019; Guest, 2019; Dobija and Puławska, 2021), especially in advanced emerging markets where corporate governance failures costs are excessively high
The interest in having international representatives on supervisory boards of multinational businesses is motivated by the idea that foreign experts lead to company internationalization
The findings showed that with the increase in the share of international experts in supervisory boards, the financial performance improves among companies that do not operate in foreign markets
Summary
Corporate governance is a very popular topic (Słomka-Gołębiewska and Urbanek, 2016; Dobija and Kravchenko, 2017; García-Sánchez et al, 2018; Joh et al, 2018; Kumar et al, 2018; Shin et al, 2018; Goergen and Tonks, 2019; Guest, 2019; Dobija and Puławska, 2021), especially in advanced emerging markets where corporate governance failures costs are excessively high For such countries as Poland – which is the largest and most developed economy in Central and Eastern Europe (CEE) – the necessity to compete for foreign investors from other established markets is extremely significant. The study described below was aimed to evaluate the associative relationship between international supervisory board experts and foreign ownership, and their impact on firm financial and operating performance. The findings showed that with the increase in the share of international experts in supervisory boards, the financial performance improves among companies that do not operate in foreign markets. The last section will provide a discussion and conclusions of the study
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