We examine the benefits and costs associated with foreign independent directors (FIDs)
at U.S. corporations. We find that firms with FIDs make better cross-border acquisitions
when the targets are from the home regions of FIDs. However, FIDs also display
poor board meeting attendance records and are associated with a greater likelihood of
intentional financial misreporting, higher CEO compensation, and a lower sensitivity
of CEO turnover to performance. Finally, firms with FIDs exhibit significantly poorer
performance, especially as their business presence in the FID’s home region becomes
less important.