Ownership and Board Independence in a Context of Capital Market Liberalization

Abstract

We examine what predicts the extent of board independence, with a focus on the role of international owners in a sample of French corporations, during a period where the French context witnessed accelerated capital market liberalization. Board independence is a means to ensure effective monitoring over management for the benefit of shareholders. We test the idea that different types of owners will differentially impact the extent to which a board will be independent, one main reason being the differences in the legal and political economic institutions in the owners’ home countries. Despite some global convergence, owners may still differ in their views depending on their country of origin on the importance of board monitoring relative to other board tasks, such as resource provision to management.