Market enforcement under different legal regimes: a comparison of France and Canada

  • Denis CormierEmail author
  • Luania Gomez Gutierrez
  • Michel Magnan


Building upon institutional theory, this study investigates whether and how market enforcement mediates the relationship between external (country-level) and internal (firm-level) corporate governance mechanisms. We focus on two countries with contrasting legal, regulatory and institutional regimes: Canada and France. Market enforcement is proxied by two measures of market efficiency: abnormal returns and price volatility. Our results suggest that external governance mechanisms interact with internal governance mechanisms via market enforcement, which differs greatly between both countries. Hence, the complementarity of internal and external governance mechanisms depends upon the nature and type of enforcement (i.e., emphasis on ex-ante monitoring and compliance vs. ex post sanctions).


Corporate governance Enforcement Legal regime 



Denis Cormier acknowledges the financial support of Social Sciences and Humanities Research Council, of the Chair in Financial and Organizational Information and of Autorité des marchés financiers (AMF). Michel Magnan acknowledges the financial support of Social Sciences and Humanities Research Council, of S.A. Jarislowsky Chair in Corporate Governance and of the Institute for the Governance of Private and Public Organizations. The content of this article does not necessarily reflect the opinion of financial supporters; any errors are the responsibility of the authors.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  • Denis Cormier
    • 1
    Email author
  • Luania Gomez Gutierrez
    • 1
  • Michel Magnan
    • 2
  1. 1.ESG UQAMMontrealCanada
  2. 2.Concordia UniversityMontrealCanada

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