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Contemporary Accounting Research Vol. 42 No. 2 2025

Navigating global uncertainty: Do foreign national directors protect US firms from supply chain disruptions?

Rohan D'Lima1; Ariel Rava2; Musa Subasi3

1 Supply Chain Management and Decision Support Department NEOMA Business School Mont‐Saint‐Aignan France · 2 Department of Accounting Sy Sims School of Business, Yeshiva University New York New York USA · 3 Accounting and Information Assurance Robert H. Smith School of Business, University of Maryland College Park Maryland USA

open access

Abstract

We examine whether foreign national directors (FNDs) on US corporate boards help their firms mitigate the adverse effects of economic policy uncertainty (EPU) shocks originating from the directors' home countries. Using a comprehensive data set of US manufacturing firms' international supply chain relationships from 2003 to 2019, we find that EPU spikes in supplier countries lead to significant declines in aggregate US imports as well as in buyer firms' inventory purchases, sales, and market valuation. However, firms with FNDs from the affected countries are better able to mitigate these negative impacts. Cross‐sectional analyses reveal that the beneficial role of FNDs is more pronounced in firms with limited operational slack, greater difficulty accessing information about supplier countries, and higher financial constraints. Robust to a battery of sensitivity tests, our findings underscore the importance of FNDs on corporate boards during times of increased global uncertainty, especially for firms heavily reliant on foreign suppliers, and inform the debate on board diversity and supply chain resilience amid economic policy‐driven uncertainties.

DOI
10.1111/1911-3846.13040
Volume
42
Issue
2
Pages
1298-1330
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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