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| Author: | Millet-Reyes, B. Zhao, R. |
| Title: | A comparison between one-tier and two-tier board structures in France |
| Journal: | Journal of international financial management & accounting
2010 : AUTUMN, VOL. 21:3, p. 279-310 |
| Index terms: | board of directors corporate governance management shareholders France |
| Language: | eng |
| Abstract: | In France, companies operate in a unique environment characterized by the strong involvement of block shareholders (here as: b-s-hs.), e.g. families and banks. Moreover, the French legal system lets firms to choose btw. a one-tier (as: 1-t.) or a two-tier (as: 2-t.) board structure (as: b-s./b-ss). This study examines if this choice can affect the firm's operating and stock performance. The regression results provide strong evidence that ownership and b-ss. are used together as corporate governance (hereafter as: c-g.) tools. This study's test results show that while family control has a negative impact on c-g., French institutional (as: inst.) b-s-hs. play a positive role as monitors of 1-t. structures. On the contrary, they are more likely to misuse the 2-t. board system by promoting interlocked directorship, board opacity and their own interests as creditors. Foreign inst. investors are not found to have any impact on firm performance, regardless of b-s. There is found no inverse relationship btw. board size and efficiency in France. |
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