Cross-listing, foreign independent directors and firm value

This paper examines how cross-listing affects firm value through changes in the foreign independent director composition of corporate boards. Using a novel dataset of directors’ foreign experience and nationalities in Chinese listed firms, we find a significant increase in high-quality foreign independent directors after cross-listing. The presence of foreign independent directors on the board is positively associated with firm value and foreign sales. The market reaction to the announcement of the appointment of these directors in cross-listed firms is positive. Our evidence suggests that improving the board composition is an economic channel for the valuation premium of cross-listing.