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Market enforcement under different legal regimes: a comparison of France and Canada

Author

Listed:
  • Denis Cormier

    (ESG UQAM)

  • Luania Gomez Gutierrez

    (ESG UQAM)

  • Michel Magnan

    (Concordia University)

Abstract

Building upon institutional theory, this study investigates whether and how market enforcement mediates the relationship between external (country-level) and internal (firm-level) corporate governance mechanisms. We focus on two countries with contrasting legal, regulatory and institutional regimes: Canada and France. Market enforcement is proxied by two measures of market efficiency: abnormal returns and price volatility. Our results suggest that external governance mechanisms interact with internal governance mechanisms via market enforcement, which differs greatly between both countries. Hence, the complementarity of internal and external governance mechanisms depends upon the nature and type of enforcement (i.e., emphasis on ex-ante monitoring and compliance vs. ex post sanctions).

Suggested Citation

  • Denis Cormier & Luania Gomez Gutierrez & Michel Magnan, 2020. "Market enforcement under different legal regimes: a comparison of France and Canada," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(1), pages 37-61, March.
    • Handle: RePEc:kap:jmgtgv:v:24:y:2020:i:1:d:10.1007_s10997-019-09464-2
    DOI: 10.1007/s10997-019-09464-2
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