Returnee directors and green innovation

Abstract

This study examines the effect of returnee directors, defined as local directors who have studied or worked in foreign countries, on a firm’s green innovation. Utilising robust econometric modelling, we examine a large sample of A-share nonfinancial firms listed on the Shenzhen and Shanghai stock exchanges. Our findings reveal a positive and significant relationship between returnee directors and green innovation. Interestingly, this association remains consistent across both environmentally sensitive and non-sensitive industries. However, it becomes more pronounced when returnee directors are non-executive, function within state-owned enterprises, number more than one on the board, or operate in firms with poor internal and external corporate governance environments. Furthermore, we demonstrate that returnee directors, armed with foreign education or work experience, increase green innovation. The results withstand a series of robustness checks, including the Heckman two-step sample selection model and propensity score matching. Overall, the results suggest that returnee directors drive green innovation.