Abstract
We manually collected a dataset comprising the overseas experiences of management teams of listed Chinese firms and investigated the effects of returnee talent on firm investment efficiency (InvEff). The results show that (1) returnees improve InvEff significantly, especially for firms that experience overinvestment; (2) the central-government-controlled state-owned enterprises benefit the most from overseas returnees; and (3) foreign experience in countries with effective governance and low corruption levels have significantly marginal effects on the improvement in InvEff. This study highlights a new channel of international knowledge spillover and practically guides the introduction of talent policy in emerging markets.
Acknowledgements
For helpful comments and suggestions, we thank the anonymous referee; Gilles Hilary, the editor; Rui Shen; Maobin Wang; Weiqiang Tan; and Xiaoyun Yu. All remaining errors are ours.
Notes
2 The equity-ownership structure usually attracts much attention, as it is important to a firm's activities and decision-making. For example, in US firms, family ownership may decrease agency conflicts between equity and debt claimants (Anderson, Mansi, & Reeb, Citation2003), and family firms may perform better than nonfamily firms (Anderson & Reeb, Citation2003), although they may engage in more informed trading via short sales (Anderson, Reeb, & Zhao, Citation2012).
3 We mainly use the corruption index estimated for the 1991–1997 period because it is closest to our sample period.
4 Tobin's Q usually can be seen as the ratio of the present value of expected cash flows to the replacement value of assets in place, while MB is commonly defined as the market value of a firm's equity divided by the book value of equity, which may be affected by leverage.
5 Untabulated tests show that our results are almost identical using other proxies for firm size, such as the market value of equity, sales, and the number of employees. Related results are available for request.