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Mitigating Negative Spillovers from Categorization of Foreign-Listed Firms: The Role of Host-Country Independent Directors

  • Eugene Kang (a1) and Asda Chintakananda (a2)

This study examines how cognitive categorization by host-country investors give rise to negative spillovers among host-country foreign-listed firms from the same home country when one of these foreign-listed firms discloses a financial reporting irregularity. This study further examines how attributes of host-country independent directors mitigate such negative spillover effects through signaling fulfilment of their fiduciary duties. Our results based on Chinese foreign-listed firms on the Singapore Stock Exchange from 2007–2014 reveal that host-country independent directors increase spillover effects among foreign-listed Chinese firms from financial reporting irregularities. However, such increase is attenuated when these directors signal fulfilment of their fiduciary duties through home-country, industry, or task-related experiences, and the observed mitigating effect is stronger when they possess a combination of these experiences.


В этом исследовании рассматривается, как когнитивная категоризация со стороны инвесторов из принимающей страны приводит к негативным побочным эффектам для иностранных компаний из одной и той же страны, когда одна из этих иностранных компаний нарушает финансовую отчетность. В данной работе также изучается, какие качества независимых директоров в принимающей стране нивелируют негативные побочные эффекты, благодаря выполнению фидуциарных обязанностей. На основании данных из китайских компаний, зарегистрированных на Сингапурской фондовой бирже в период 2007–2014 годов, делается вывод о том, что независимые директора в принимающей стране способствуют усилению побочных эффектов среди китайских компаний из-за нарушений финансовой отчетности. Тем не менее, такой эффект ослабляется, когда эти директора сигнализируют о выполнении своих фидуциарных обязанностей в том случае, если они обладают опытом, связанным со страной происхождения, отраслью или задачами, при этом наблюдаемое воздействие усиливается, когда они обладают комбинацией этих качеств.

Corresponding author
Corresponding author: Asda Chintakananda (
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Accepted by: Senior Editor Jing Li

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