Governance, Managers’ Entrenchment and Performance: Evidence in French Firms Listed in SBF 120

Dr. Sonia Moussa, Dr. Houssem Rachdi and Aymen Ammeri
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Dr. Sonia Moussa: Institute of the High Commercial Studies of Sousse,University of Sousse, Tunisia
Dr. Houssem Rachdi: Faculty of Law, Economics and Management of Jendouba,University of Jendouba, Tunisia
Aymen Ammeri: Ph.D. Student in High Business School of Tunis,University of Manouba, Tunisia

International Journal of Business and Social Research, 2013, vol. 3, issue 2, 35-48

Abstract: Research on managerial entrenchment is quickly gaining attention because of its implications for performance. This concept belongs to the field of corporate governance and little has been studied about it. This paper seeks to investigate the impact of managerial entrenchment on firm performance surrounding seniority and discretionary accruals using a sample of 40 French companies listed on the SBF 120 for the period 2002-2009. We find a significant relationship between management entrenchment, as measured by discretionary accruals, seniority and characteristics of board of directors. This reveals that board of directors contributes to the control of managers. The test of management entrenchment’s effect on performance remains statistically significant for all measures of firm performance (Return on Assets, Return on Equity, Tobin’s Q and Market to Book).

Keywords: Management entrenchment; Governance mechanisms; Performance; Seniority Discretionary accruals. (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:mir:mirbus:v:3:y:2013:i:2:p:35-48

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