Directors' Foreign Experience and Firm Innovation.

This paper investigates whether board directors with foreign experience promote firm innovation. The evidence suggests that firms with a larger proportion of directors with foreign experience on their board have better innovation outcomes, both quantity and quality. This finding remains for various robustness tests. We propose three potential underlying channels behind and verify them. The findings show that the positive effect of directors' foreign experience on firm innovation is stronger for highly innovative industries and more pronounced when foreign experience is gained in highly innovative countries, supporting the advising channel. Besides, independent directors exert a greater effect on innovation than non-independent directors, supporting the monitoring channel. Furthermore, directors with foreign experience provide more failure-tolerant CEO incentives as they lower CEO turnover-performance sensitivity and CEO pay-for-performance sensitivity, supporting the insurance channel. Overall, our paper provides robust and comprehensive evidence for the impact of directors' foreign experience on firm innovation. [ABSTRACT FROM AUTHOR]