Corporate governance and financial performance: An empirical study of the links between the governance practices of French companies and their financial results

Abstract

Many large French companies have become aware of the importance of organizational arrangements within their organizations. By implementing these practices, companies produce a significant effect on their stakeholders. This article presents a theoretical study coupled with an empirical study. We will use the quantitative method in order to assess the impact of corporate governance practices on their financial performance. The data were collected over a period of time on publicly traded companies. The results show that companies with effective corporate governance practices have superior financial performance. Companies with well-structured boards of directors, independent audit committees and strong internal control mechanisms tend to achieve superior financial performance. The relationship between corporate governance and financial performance is stronger for large companies than for small companies. The results show the importance of corporate governance practices for companies' financial performance and can help companies understand the importance of governance in improving their financial performance.

Keywords: Governance, financial value, stakeholders, evolution, listed companies, impact.

JEL Classification: G34

Paper type: Empirical research.