This study uses cross-border mergers as a test of the ability of foreign directors to provide effective strategic advising. We find that firms with foreign directors on their boards are more likely to engage in cross-border mergers, pursue a higher number of cross-border mergers, and invest more in those mergers. We further determine that firms with foreign directors are more likely to undertake nondiversifying mergers, enjoy friendly mergers, and acquire privately held targets. Moreover, we find that firms with foreign directors have higher announcement period returns and pay less for their cross-border targets.
Alabdullah, Y. and Ferris, S.P. (2014), "Bridging the Cultural Divide: The Role of Foreign Directors in Cross-Border Mergers", Corporate Governance in the US and Global Settings (Advances in Financial Economics, Vol. 17), Emerald Group Publishing Limited, Bingley, pp. 35-79. https://doi.org/10.1108/S1569-373220140000017013
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