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French connection: interlocking directorates and the ownership-control nexus in an insider governance system

  • Tristan Auvray

    ()

    (CEPN - Centre d'Economie de l'Université Paris Nord - CNRS : UMR7234 - Université Paris 13 - Université Sorbonne Paris Cité (USPC))

  • Olivier Brossard

    ()

    (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - Université des Sciences Sociales - Toulouse I : EA4212 - École Nationale de Formation Agronomique - ENFA - Institut d'Études Politiques [IEP] - Toulouse - Université Toulouse le Mirail - Toulouse II)

We reveal the non-separation of ownership and control for multiple blockholders in the French insider governance system. We show that overlapping directorships of large listed corporations are explained by their ownership connections. Both large and small stakes, from 20% to 1% of cash-flow rights or voting rights, have high explanatory power. Some shareholdings are control rather than monitoring related. We provide evidence also that cross-ownership allows CEOs to entrench themselves. Finally, we demonstrate that causality goes from ownership to interlocking directorates, for both unilateral stakes and cross-shareholdings.

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Paper provided by HAL in its series CEPN Working Papers with number hal-00842582.

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Date of creation: May 2013
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Handle: RePEc:hal:cepnwp:hal-00842582
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