Abstract
We extend director exit literature by introducing bilateral country political relations and hold that foreign director exit from emerging markets is nontrivially impacted by the political relations between foreign director's home country and firm country. We apply social identity theory to elucidate how local top managers categorize foreign directors based on nationality. Using foreign directors of Chinese listed companies from 2000 to 2018 as our research sample, we find that bilateral country political relations is negatively related foreign director exit in emerging markets. In addition, regional government-business closeness, firm foreign ownership, and foreign director tenure can moderate the negatively relationship between political relations and foreign director exit.
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