Skip to Main content Skip to Navigation
Journal articles

Employee Ownership, Board Representation, and Corporate Financial Policies

Abstract : 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.
Document type :
Journal articles
Complete list of metadatas

Cited literature [56 references]  Display  Hide  Download

https://halshs.archives-ouvertes.fr/halshs-00626310
Contributor : Edith Ginglinger <>
Submitted on : Sunday, September 25, 2011 - 4:16:30 PM
Last modification on : Wednesday, October 14, 2020 - 4:04:41 AM
Long-term archiving on: : Monday, December 26, 2011 - 2:21:14 AM

File

Employee-Ownership-Paper-JCF20...
Files produced by the author(s)

Identifiers

Collections

Citation

Edith Ginglinger, William Megginson, Timothee Waxin. Employee Ownership, Board Representation, and Corporate Financial Policies. Journal of Corporate Finance, Elsevier, 2011, 17, pp.868-887. ⟨10.1016/j.jcorpfin.2011.03.005⟩. ⟨halshs-00626310⟩

Share

Metrics

Record views

430

Files downloads

1980