The role of foreign shareholders in improving their company's performance

Abstract

This article aims to highlight the role that foreign shareholders can play in the governance of their company. Their ability to monitor is closely linked to their interests and their involvement in the company's activities. We therefore analyse, through the prism of agency theory, the effect of their nature (institutional, government, individual) and their status within the company (manager, employee, board member) on their company's performance.

The data are processed using generalised linear models (GLM) on a sample of 193 companies, some or all of whose capital is held by one or more foreign shareholders.

The results show that, regardless of the nature of the foreign shareholder, his or her shareholding has a positive influence on the company's performance. Furthermore, the fact that they hold management positions within the company also contributes to improving the company's performance. Overall, these results confirm the convergence of interests thesis developed by Jensen and Meckling (1976).

JEL classification : G31

Type of paper : Empirical research