Corporate governance and firm characteristics as explanatory factors of shareholder activism: Validation through the French context

Abstract

This study deals with the major determinants of company shareholder activism investigated with according to a set of SBF 120 listed firms. Based on a sample of 77 companies, observed over the period 2008–2012, we are led to conclude that some firm governance characteristics do appear to affect shareholding activism. In addition, it has been revealed that the presence of institutional investors, ownership concentration, leaders’ presence in the capital, control structure, leadership change, firm growth as well as leverage level appear to have a significant influence on the probability of activism to take place.

Keywords:

• shareholder activism
• corporate governance
• firm characteristics

Public Interest Statement

The main purpose of this article was to improve the explanatory factors that influence shareholder activism; the author’s objectives include highlighting the role played by corporate governance, and the characteristic firm. Our main findings reveal that: the presence of institutional investors, ownership concentration, presence of managerial ownership, control structure, change of leaders, indebtedness rate, and company growth prove to constitute the major significant determinants relevant for shareholder activism to take place. The results achieved by this study seem to be potentially useful to shareholders, outsider investors, managers as well as entrepreneurial policy-makers for the purpose of improving and further consolidating the corporate governance practices.

Notes

1.  The myopic institutions theory: it provides that the shareholders are "speculative shareholders." (Jarboui & Olivero, 2008).

2.  The portfolio theory: it considers that investors are required to pursue some diversification strategies in order to minimize the portfolio risk. Ben M’Barek (2003).

Additional information

Funding

Funding. The authors received no direct funding for this research.

Notes on contributors

Siala Bouaziz Souha

Souha Bouaziz Siala, PhD, is an associate researcher at LARTIGE (Laboratory of Research) in the University of Sfax, Tunisia. She is the corresponding author and her research interests are corporate governance, earnings management, and accounting. Anis Jarboui is Professor of Finance and Accounting at the University of Sfax, Tunisia. His research interests are in corporate governance, financial literacy, and behavioral finance.