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Lessons from The French Exception: How Firms Choose Between Unitary and Dual Boards

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  • François Belot

    (THEMA - Théorie économique, modélisation et applications - UPN - Université Paris Nanterre - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique)

  • Edith Ginglinger

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique)

  • Myron Slovin

    (IHEC - Institut des hautes études commerciales (Carthage, Tunisie) - UCAR - Université de Carthage (Tunisie))

  • Marie Sushka

    (AUTRES)

Abstract

Many governance reform proposals focus on strengthening board monitoring. In contrast, Adams and Ferreira (2007) and Harris and Raviv (2008) conclude that a passive board is often optimal. We examine determinants of board structure choice in France, where firms are free to choose between a unitary (passive) board and a dual (monitoring) board. We find firms with greater asymmetric information are likely to adopt a unitary board. Firms with a high potential for private benefit extraction are likely to adopt dual boards. Firms well monitored by financial market and institutional forces are less likely to have dual boards. Our results imply that freedom of contract about board structure is valuable for shareholders.

Suggested Citation

  • François Belot & Edith Ginglinger & Myron Slovin & Marie Sushka, 2012. "Lessons from The French Exception: How Firms Choose Between Unitary and Dual Boards," Post-Print hal-01637565, HAL.
    • Handle: RePEc:hal:journl:hal-01637565
    Note: View the original document on HAL open archive server: https://hal.science/hal-01637565
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