Shareholder Agreements and Firm Value: Evidence from French Listed Firms
Posted: 14 Oct 2008 Last revised: 9 Feb 2020
Date Written: September 1, 2010
In listed companies, some shareholders can be signatories to agreements that govern their relations. This paper investigates the effects of such agreements on the valuation of firms. I use a sample of French firms that is well suited for my analysis insofar as French law requires the disclosure of shareholder agreements. In line with previous literature, a negative relationship between firm value and the dispersion of voting rights across major shareholders is observed. However, the existence of a shareholder agreement tends to offset this negative effect. This countervailing effect is more pronounced when a “concerted action” provision is in force and/or the contracting shareholders are of the same type. Shareholder agreements thus appear as efficient coordination mechanisms rather than expropriation mechanisms.
Keywords: Shareholder agreements, large shareholders, corporate governance
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