Does foreign experience of top management affect corporate environmental responsibility? Evidence from China

Corporate environmental responsibility (CER) has attracted sustained attention recently; however, it is still empirically unclear whether and how top management teams' (TMTs') foreign experience affects CER. This paper uses firm-level data from China during 2008-2019 to examine the relationship between TMTs' foreign experience and CER. The results show that TMTs' foreign experience significantly promotes CER, evident in firms whose TMTs have foreign experience, invest more in environmental protection and have a lower incidence of environmental irregularities. This relationship is stronger for firms controlled by the government, with better corporate governance, and exposed to more stringent environmental regulation. We further document that establishing sustainability committees is an essential channel for TMTs with foreign experience to advance CER. Our findings extend prior research by identifying a new connection between managerial characteristics and firms' environmental governance and offering a new perspective to advance and improve CER practices.

Automated summary

This paper examines the impact of top management teams' foreign experience on corporate environmental responsibility (CER) using firm-level data from China during 2008-2019. The results indicate that TMTs' foreign experience significantly promotes CER, leading to increased investment in environmental protection and lower incidence of environmental irregularities. This relationship is stronger for government-controlled firms with better corporate governance and more stringent environmental regulation. The establishment of sustainability committees is found to be an essential channel for TMTs with foreign experience to advance CER.