Board Directors With Foreign Experience and Stock Price Crash Risk : Evidence From China

This study examines the impact of board directors with foreign experience (BDFEs) on stock price crash risk. We find that BDFEs help reduce crash risk. This association is robust to a series of robustness checks, including firm fixed effects model, Heckman procedure, instrumental variable estimation, propensity score matching (PSM) procedure, change analysis, and an exogenous shock. Moreover, we find that the imprinting effect and eyeball effect are the underlying mechanisms by which BDFEs affect crash risk. The results still hold after controlling for managerial ability of BDFEs and corporate governance effect. Our findings suggest that the characteristics of board directors matter for stock price crash risk