The Shielding Effect of Foreign Managers: Evidence From Chinese Listed Companies During the U.S.-China Trade War

Abstract

This study applies a difference-in-differences approach to evaluate the impact of managers' foreign experience on the long-term performance of firms during the U.S.-China trade war. Empirical evidence indicates that Chinese publicly listed firms with American managers outperform their counterparts. They exhibit higher total assets, investment, and operational efficiency after the trade war. This pattern is not observed among managers from other countries. Further investigation reveals that firms affected by U.S. policy, including those in high-tech sectors and state-owned enterprises, do not gain advantages from the presence of American managers. The baseline effects differ among firms based on their varying degrees of foreign exposure. The effects increase when firms undertake exports and direct investment in the United States and have larger foreign shareholdings. Moreover, our findings indicate that American managers maintain relationships with U.S. customers after the trade war, enabling firms to mitigate the adverse impacts more effectively.