Effects of foreign directors on firm performance: Evidence from Japan.
| Project/Area Number |
19K13744
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| Research Category |
Grant-in-Aid for Early-Career Scientists
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| Allocation Type | Multi-year Fund |
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| Review Section |
Basic Section 07060:Money and finance-related
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| Research Institution | Waseda University |
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Principal Investigator |
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| Project Period (FY) |
2019-04-01 – 2022-03-31
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| Project Status |
Completed (Fiscal Year 2021)
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| Budget Amount *help |
¥910,000 (Direct Cost: ¥700,000、Indirect Cost: ¥210,000)
Fiscal Year 2020: ¥390,000 (Direct Cost: ¥300,000、Indirect Cost: ¥90,000)
Fiscal Year 2019: ¥520,000 (Direct Cost: ¥400,000、Indirect Cost: ¥120,000)
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| Keywords | Foreign directors / Corporate governance / Firm performance / Japan / Foreign director / Corporate Governance / Corporate Finance / Board diversity / Foreign Director / Firm Performance / Managerial Economics |
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| Outline of Research at the Start |
This paper examines the effects of foreign directors on firm performance by
showing empirical evidence from a high-context corporate governance system. Whether foreign directors can bring benefits to firms in this high-context community after having offset the costs to bring them in and can they help Japanese firm to break away from the domestic corporate governance model toward a global hybrid one, such as Anglo-American system? These questions are
important to answer not only to the corporate executives and policy makers in order to make appropriate decisions but also to the research field.
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| Outline of Final Research Achievements |
This paper examines the effects of foreign directors on firm performance using panel data of nonfinancial listed firms in Japan from 2004 to 2015. We find that the relationship between foreign directors and firm performance is generally not strong. While the market appears to react positively to the first introduction of a foreign director, the returns are not statistically significant. The first introduction of a foreign director is significantly associated with changes in ownership structure or business strategy aimed at expanding overseas business and strengthening corporate governance. Nevertheless, we also obtain no evidence that the first appointment of a foreign director improves firm performance.
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| Academic Significance and Societal Importance of the Research Achievements |
This research fills the research gap by examining the effects of foreign directors on firm performance in a bank-based economy, stakeholder corporate model. It hence acts as meaningful references to investors, corporate executives, and policymakers adjusting diversity policies.
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Report
(4 results)
Research Products
(3 results)
