Employee Ownership, Board Representation, and Corporate Financial Policies
Ginglinger, Edith; Megginson, William; Waxin, Timothée (2011), Employee Ownership, Board Representation, and Corporate Financial Policies, Journal of corporate finance, 17, 4, p. 868-887. http://dx.doi.org/10.1016/j.jcorpfin.2011.03.005
TypeArticle accepté pour publication ou publié
Journal nameJournal of corporate finance
MetadataShow full item record
Abstract (EN)French law mandates that employees of publicly listed companies can elect two types of directors to represent employees. Privatized companies must reserve board seats for directors elected by employees by right of employment, while employee-shareholders can elect a director whenever they hold at least 3% of outstanding shares. Using a comprehensive sample of firms in the Société des Bourses Françaises (SBF) 120 Index from 1998 to 2008, we examine the impact of employee-directors on corporate valuation, payout policy, and internal board organization and performance. We find that directors elected by employee shareholders increase firm valuation and profitability, but do not significantly impact corporate payout policy. Directors elected by employees by right significantly reduce payout ratios, but do not impact firm value or profitability. Employee representation on corporate boards thus appears to be at least value-neutral, and perhaps value-enhancing in the case of directors elected by employee shareholders.
Subjects / KeywordsCorporate boards; Privatization; Payout policy; Employee ownership
Showing items related by title and author.
Reforming Corporate Governance: Evidence from the Choice between Unitary versus Dual Boards of Directors Belot, François; Ginglinger, Edith; Slovin, Myron; Sushka, Marie (2012) Communication / Conférence