Edited by Sabri Boubaker, Douglas Cumming and Duc K. Nguyen
Chapter 31: How to foster responsible corporate governance? Voluntary versus legislative approaches
Corporate governance, in particular, board of directors’ composition, is regulated in most jurisdictions by voluntary and legislative instruments, as a way to foster good practices, responsible behavior and firm performance. Understanding the relative costs and benefits of the two approaches is therefore an important question. This chapter proposes a first step in this direction, by investigating and comparing how French listed companies (SBF 120) comply with the AFEP-MEDEF code of corporate governance regarding independence on one side and the mandatory board gender quota on the other. The chapter reviews the literature on board composition and firm performance, and related soft and hard regulations. It reports that independent and female directors have specific individual characteristics that may influence the overall impact of the regulation (soft or hard). Furthermore, it shows that while independent directors have become key players inside the boardroom through committee assignment, women still face an indirect inner glass ceiling that may jeopardize the efficiency of the quota.
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