Changing Corporate Governance in France in the Late Twentieth Century

Abstract

France belongs to those highly developed western European countries that belong to the G7, the group of seven countries with the most developed national economies. Its national capital, Paris, is home to the Organization for Economic Co-operation and Development (OECD). OECD is an active promoter of international standards of corporate governance best practice. Historically, governance practices are however highly heterogeneous when comparing different national settings. At present, France shares most of the characteristics of a liberal market economy, and its code of reference for corporate governance was the first of its kind in continental Europe when first published in 1995. France’s economic history, however, has a longstanding tradition of interventionism by the State, and liberal market mechanisms did not have the favor of the political elite after World War II. Since the middle of the 1980s, the French system of corporate governance has undergone major transformations at a relatively fast pace. The public administration has increasingly retired from its active role in corporate governance matters, increasing the weight of shareholder-oriented market mechanisms. This chapter retraces the history of the French corporate governance system over the second half of the twentieth century. Significant change is shown to have occurred in three stages, whose underlying rationale appears to be broadly consistent with North’s theory of institutional change.