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

2013; MIR Center for Socio-Economic Research; Volume: 3; Issue: 2 Linguagem: Inglês

10.18533/ijbsr.v3i2.228

2164-2559

Sonia Moussa, Houssem Rachdi, Aymen Ammeri,

Financial Reporting and Valuation Research

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) .