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Dissecting Corporate Innovation in China Read chapter Read first chapter

2021 | OriginalPaper | Chapter

Overseas Experience of Top Management Teams and Firm Outcomes: Evidence from Mainland China

Author : Ming Zhang

Published in: Proceedings of the 4th International Conference on Economic Management and Green Development

Publisher: Springer Singapore

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Abstract

In emerging economies, overseas returnees from developed countries begin to take positions at all levels of firms. In this context, this paper investigates how overseas returnee executives affect firm outcomes. Using data on the real estate industry in China, I do multivariate analysis on the impact of the overseas experience of top management teams on firm performance and consider moderating effects of ownership properties and power distribution within TMTs. I find a positive association between the richness of overseas experience of TMTs and firm performance. Further analyses show the relationship holds for private and state-owned corporations and is unlikely to be driven by overseas returnee CEOs. A tentative explanation is TMTs with strong overseas experience may have advantages in raising funds internationally, which helps reduce capital costs and enhance firm performance.

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Footnotes
1
Data from the Ministry of Education of the People’s Republic of China.
 
2
I do not control this average age and male ratio in the baseline regression due to a collinearity.
 
3
The education level information of around 30% of TMT members are missing in my dataset. Using available members’ information to construct average statistic will lead bias, as those executives with low-level degrees hold back their degree information on annual reports. Thus, to make best use of my data while ensuring accuracy of measurement, I leave out firms with less than 80% members’ degree information available, and by doing this, the sample size decreases to around 200.
 
4
Variance Inflation factor shows there is a strong correlation between male ratio, average age of TMT members, and log(asset). Thus, I not control these characteristics in baseline regressions and only control these in this part.
 
5
VIF are small enough for these two regressions. Thus, this is not a result of strong collinearity after controlling for interaction terms. One possible reason might be the data is from 2015 to 2017, which coincides the collapse of Chinese stock market.
 
6
This replacement may not lose much information according to statistics summary, which shows the average statistics of average overseas experience within TMTs is only less than 4% and my data shows over half of corporations with positive average overseas experience has only one overseas returnee executive.
 
7
In terms of corporate foreign debt, according to statistics in the Wind Financial Terminal Platform in China, the number of foreign-currency-denominated debt issued in China (including those listed in Hong Kong) has increased nearly tenfold, from around 20 to over 150.
 
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Metadata
Title
Overseas Experience of Top Management Teams and Firm Outcomes: Evidence from Mainland China
Author
Ming Zhang
Copyright Year
2021
Publisher
Springer Singapore
Book
Proceedings of the 4th International Conference on Economic Management and Green Development

Print ISBN: 978-981-16-5358-2

Electronic ISBN: 978-981-16-5359-9

Copyright Year: 2021

DOI
https://doi.org/10.1007/978-981-16-5359-9_19