Mitigating the dual liability of newness and foreignness in capital markets: The role of returnee independent directors

Li, W., Bruton, G. & Filatotchev, I. (2016). Mitigating the dual liability of newness and foreignness in capital markets: The role of returnee independent directors. Journal of World Business, 51(5), pp. 787-799. doi: 10.1016/j.jwb.2016.06.004

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Abstract

Foreign firms undergoing an initial public offering in developed economies face a dual liability of newness and foreignness that can negatively impact the firm's ability to access capital. In this study, we examine the ability of returnee independent directors to overcome such a liability among 232 foreign listings in the U.S. We find that returnee independent directors positively impact the price premium of the foreign IPO. We also find that this relationship is contingent on the level of ownership retained by non-independent directors, the level of ownership retained by venture capitalists, and investor protection in the firm's country of origin.

Item Type: Article
Additional Information: © 2016, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Uncontrolled Keywords: Returnee independent directors; Liability of newness; Liability of foreignness in capital markets; Investor protection
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Cass Business School > Faculty of Management
URI: http://openaccess.city.ac.uk/id/eprint/15107

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