CORPORATE GOVERNANCE AND FIRM PERFORMANCE: THE SUSTAINABILITY EQUATION?

In order to achieve a sustainable growth and to respond to external pressures (regulation, society), firms take more and more frequently into account their social and environmental externalities in the decision-making process, through the development of their Corporate Social Responsibility policy (CSR). Corporate governance appears here as a way to integrate shareholders’ and stakeholders’ objectives. Is corporate governance a strategic mediator between CSR objectives and firm performance? Is corporate governance a key stone of CSR firm commitment? This dissertation provides both theoretical and empirical evidences in the French case where corporate governance is defined as a hybrid model between the shareholder and stakeholder models. After introducing the dissertation, chapters 2 and 3 investigate the link between firm objectives and performance. From an INSEE national survey on sustainable development, Chapter 2 shows how firm motivations (defensive, pro-social or strategic) is a key determinant of their social, societal and environmental CSR awareness. In particular, firms implementing strategic CSR commit more to the issues related to their strategic stakeholders. CSR motivations may therefore mediate the relationship between CSR commitment and financial performance. Integrating firm objectives, the decision-making process at the top is driven by the board of directors. Chapter 3 theoretically demonstrates how board composition may affect firm outcomes. In particular, the model determines the optimal board functioning (monitoring or advising) depending on the relative cost and benefit of board expertise and independence. After highlighting that board composition is a key determinant of governance effectiveness, the three last chapters explore how corporate governance, and in particular board composition, may achieve some CSR demands from shareholders, stakeholders and society and affect firm outcomes. These chapters rely on empirical studies based on listed companies (SBF120) over the 2006-2014 period. Chapter 4 studies the link between independent directors and operating performance in order to evaluate their efficiency. The independence of directors is indeed usually considered as an answer to shareholders’ demands to reduce the conflict of interest with management. We show that in France, independents directors are better selected than affiliated directors in terms of intrinsic ability but suffer from an informational gap. However, this gap may be shortened by industry expertise and/or social connections. Chapter 5 investigates from the shareholder and stakeholder perspectives how board composition is related to CSR commitment. We show that CSR engagement is driven by the reduction of conflicts with stakeholders rather than the creation of private benefit for managers. Stakeholder representation inside the boardroom may therefore affect investment in the different CSR issues. Chapter 6 analyzes how firms comply with the French gender quota of women inside the boardroom in 2014. The quota has indeed broken the glass-ceiling experienced by female managers and increased the number of women in the director labor market. However, female directors earn 6% less in fees than their male counterparts, one third due to their characteristics (age, expertise, tenure.) and two thirds due to their positions (committees) inside the boardroom. Female directors have then experienced an inner glass-ceiling which may jeopardize the positive expected effects of board diversity on firm policy and performances. In conclusion, the discussion provides the main new prospects and research avenues opened up by this dissertation. It focuses attention on the role of corporate governance in the development of CSR and the possible applications in terms of public policy and regulation.