Disclosure quality and corporate governance : Evidence from the French Stock Market

This paper examines a combined set of corporate governance features that influence disclosure quality in a context of ownership concentration. Agency theory presents a theoretical framework linking disclosure decision to corporate governance mechanisms. Using a Multiple Correspondence Analysis (MCA), we find that firms with poor disclosure quality have higher ownership concentration, are family controlled, have a low proportion of outside directors in the board, little presence of institutional investors in the capital shares, no executive stock options plans, and present dual class shares. The MCA results also show that firms with good disclosure are not controlled by families and are characterised by a high proportion of outside directors in the board, ownership dispersion and a significant presence of institutional investors in the capital shares. As a confirmatory analysis, we use a binary LOGIT. After controlling for size, multiple listing and CAC40 membership, the results confirm a negative association between disclosure quality and family control, double voting shares grant, and ownership concentration. The results also show a positive relationship between disclosure quality and the presence of executive stock options plans, and the proportion of independent directors in the board. These findings shed the light on corporate governance features that enhance incentives for good disclosure under high ownership concentration.