The Elite and Their Boards of Directors
ESCEM-CRESS, Research Compilation Book of the ESCEM School of Business and Management No. 2
20 Pages Posted: 30 Mar 2001
Date Written: February 2001
Discussions concerning corporate governance, these based on numerous investigations by Anglo-Saxon authors, have become increasingly frequent in France in the last five years. It should be stressed, however, that French capitalism contains particularities imparted by its mode of governance. An essential aspect of this is the nature of the directors of major companies. Two-thirds of all French top managers are integrated directly into elevated management posts. Over 50% of these have worked for no more than four years within the company before taking over as managing director. This situation is not reflected in other European management models where experience and knowledge of the business are considered essential for CEO position. Another aspect of French corporate governance may be found in the cultural origins of France's management elite. More than 50% of all French companies CEOs are graduated from Polytechnique Institute (familiarly referred to as "X") and of the Ena (referred to as enarque(s)) (23% for Ena and 27% for X). This is far from being insignificant as the executive's initial training defines his managerial style. Belonging to one or the other of these two clans (Ena or Polytechnic), with the underlying link to the civil service, can have serious repercussions on the system of corporate governance. The clan tries to increase their power in the firms. In order to do this, it needs to control firms' leaders, but also the board of directors. The control of the board allows the system to master all shareholders' objections. It is also a means to widen its influence. This study proposes an analysis of the links between the characteristics of leaders and boards as well as the consequences of this control of the clan on the performance of the firm.
Keywords: Corporate governance, Clan, Entrenchment
JEL Classification: G30
Suggested Citation: Suggested Citation