The Brain Gain of Corporate Boards: Evidence from China

The Brain Gain of Corporate Boards: Evidence from China

Mariassunta Giannetti, Guanmin Liao, Xiaoyun Yu

Series number :

Serial Number: 

Date posted :

January 01 2013

Last revised :

October 29 2018
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  • Corporate boards • 
  • Corporate governance • 
  • human capital • 
  • Firm performance • 
  • firm productivity

We study the impact of directors with foreign experience on firm performance in emerging markets. We use a unique dataset from China and exploit that at different times, Chinese provinces introduced policies to attract highly talented emigrants.

These policies led to an increase in the supply of Chinese individuals with foreign experience in the local labor market and ultimately increased the likelihood that firms in these provinces had directors with foreign experience in comparison to similar firms elsewhere. We document that valuation, productivity, and profitability increase after firms hire directors with foreign experience. Furthermore, corporate governance improves and firms are more likely to make international acquisitions, to export, and to raise funds internationally. These findings suggest a channel through which the emigration of the best and brightest may lead to a brain gain and provide first time evidence on how board directors transmit knowledge on management practices and corporate governance to firms in emerging markets.

Published in

Published in: 
Publication Title: 
Journal of Finance
Volume 70, Issue 4, Pages 1629-1682


Real name:
Guanmin Liao
Real name:
Research Member
Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University