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Disclosure and minority expropriation: A study of French listed firms

  • Ben Ali Chiraz

    (DRM Crefige - Université Paris IX - Paris Dauphine)

In this paper we examine the influence of minority expropriation on disclosure level in France where shareholders are poorly protected and the main agency problem is the one between controlling and minority shareholders (type II conflict) while prior studies have been undertaken in the United States, in a context of ownership dispersion and high investor protection where the main agency conflict opposes managers to shareholders (type I conflict). Using a sample of 81 French firms on the 2001-2004 period, we find a negative relation between disclosure level and both ownership and control concentration and double voting rights shares. These results confirm that type II conflict exacerbates the disclosure problem. Controlling shareholders benefit from superior information which helps them to profit from private benefits at the expense of minority shareholders particularly when they hold voting rights in excess of their cash flow rights; therefore they are likely to reduce disclosure. Our results show also a positive relation between disclosure level and family control which is similar to Ali, Chen et Radhakrishnan (2007) findings on American firms.

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Paper provided by HAL in its series Post-Print with number halshs-00460161.

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Date of creation: 27 May 2009
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Publication status: Published in La place de la dimension européenne dans la Comptabilité Contrôle Audit, May 2009, Strasbourg, France. pp.CD ROM, 2009
Handle: RePEc:hal:journl:halshs-00460161
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00460161
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  1. Harris, Milton & Raviv, Artur, 1988. "Corporate control contests and capital structure," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 55-86, January.
  2. Marie Chavent & Yuan Ding & L. Fu & Hervé Stolowy & H. Wang, 2006. "Disclosure and Determinants Studies: An Extension Using the Divisive Clustering Method (DIV)," Post-Print hal-00200812, HAL.
  3. Fan, Joseph P. H. & Wong, T. J., 2002. "Corporate ownership structure and the informativeness of accounting earnings in East Asia," Journal of Accounting and Economics, Elsevier, vol. 33(3), pages 401-425, August.
  4. Attig, Najah & Fong, Wai-Ming & Gadhoum, Yoser & Lang, Larry H.P., 2006. "Effects of large shareholding on information asymmetry and stock liquidity," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2875-2892, October.
  5. Andrei Shleifer & Robert W. Vishny, 1996. "A Survey of Corporate Governance," NBER Working Papers 5554, National Bureau of Economic Research, Inc.
  6. Walid Ben-Amar & Paul André, 2006. "Separation of Ownership from Control and Acquiring Firm Performance: The Case of Family Ownership in Canada," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(3-4), pages 517-543.
  7. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 81-112.
  8. La Porta, Rafael & Lopez-de-Silanes, Florencio & Schleifer, Andrei & Vishny, Robert, 2001. "Investor Protection and Corporate Governance," Working Paper Series rwp01-017, Harvard University, John F. Kennedy School of Government.
  9. Chau, Gerald K. & Gray, Sidney J., 2002. "Ownership structure and corporate voluntary disclosure in Hong Kong and Singapore," The International Journal of Accounting, Elsevier, vol. 37(2), pages 247-265.
  10. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-77, December.
  11. Chiang, Raymond & Venkatesh, P C, 1988. " Insider Holdings and Perceptions of Information Asymmetry: A Note," Journal of Finance, American Finance Association, vol. 43(4), pages 1041-48, September.
  12. Ali, Ashiq & Chen, Tai-Yuan & Radhakrishnan, Suresh, 2007. "Corporate disclosures by family firms," Journal of Accounting and Economics, Elsevier, vol. 44(1-2), pages 238-286, September.
  13. Faccio, Mara & Lang, Larry H. P., 2002. "The ultimate ownership of Western European corporations," Journal of Financial Economics, Elsevier, vol. 65(3), pages 365-395, September.
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