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

Tristan Auvray (1) , Olivier Brossard (2)

1 CEPN - Centre d'Economie de l'Université Paris Nord
2 LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux

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.

Mots clés: Corporate Governance; Ownership networks; Board interlocks; Multiple blockholders

Domaines: Economies et finances

Tristan Auvray, Olivier Brossard. French connection: interlocking directorates and the ownership-control nexus in an insider governance system. 2013. ⟨hal-00842582⟩