The brain gain of corporate boards and green commitment: evidence from China

Abstract

Purpose Foreign directors from developed nations are significant brain gains for Chinese firms because they improve board competency and board diversity. Therefore, the purpose of this study is to explore the relationship between foreign directors from developed countries on Chinese listed firms and firms’ green commitment. Design/methodology/approach For the empirical analysis, first, this study applies ordinary least square regression and firm fixed model to explore the relationship between foreign directors and green commitment. For the endogeneity concerns, this study first added more control variable in the main model, then applied instrumental variable approach and propensity score matching technique. Findings This study predicts and finds that percentage of foreign directors from developed countries on Chinese listed firms’ board positively enhances the firms’ green commitment. Furthermore, this study also finds that the positive relationship between foreign directors and firms’ green commitment is more significant when firms are in a low competitive industry, have no financial constraints and are overseas-listed. This study’s findings are robust after controlling for endogeneity concerns. Originality/value This is new research on the impact of foreign directors on corporate green commitment.