Anglo-American Influence and Corporate Restructuring Practices in France

다국어 초록 (Multilingual Abstract)

This paper examines corporate restructuring activities of French companies in the context of the arrival of shareholder value oriented institutional investors from the United Kingdom and the United States. The French case is particularly well placed to study the diffusion of shareholder value in new contexts given the high degree of legal protection for workers in France. The French labour code is one of the most restrictive in terms of the size of severance payments, definition of unfair dismissal, and notice requirements for the initiation of dismissal procedures. I investigate the extent to which and conditions under which French firms implement asset divestures and/or employee layoffs. I present three important findings. First, the impact associated with the arrival of institutional investors in France is mediated by the institutional framework of employment protection. Hedge funds and stock option incentives had a positive impact on asset divestiture, whereas the effect of hedge funds on employee layoffs was positive and significant only in the case of ownership diffused companies; CEO stock option incentives do not work as an incentive mechanism in the case of employee layoffs. Second, layoffs in French companies are "defensive" - i.e. driven by weak operational performance of firms rather than constituting a mechanism for earnings management designed to appease financial markets. Third, the impact of foreign funds varies according to the types of institutional investors. I found that the investment allocation of all types of foreign investors was not significantly associated to restructuring activities, whereas hedge funds were significant and positive. Overall, I highlighted the importance of local institutional context in order to grasp a better understanding of changes in corporate practices activities influenced by the Anglo-American investors and CEO stock options. The empirical findings extend prior work that has emphasised the role of socio-political local factors in affecting the transplantation of new practices across countries.

목차 (Table of Contents)

• Abstract
• INTRODUCTION
• THEORETICAL FRAMEWORK AND HYPOTHESES
• METHODS
• RESULTS
• DISCUSSION AND CONCLUSION
• Appendix A
• REFERENCES