Beyond Dichotomy: The Curvilinear Impact of Employee Ownership on CEO entrenchment


  • Hollandts Xavier
  • Aubert Nicolas
  • Abdelhamid Abdelmehdi Ben
  • Prieur Victor


  • CEO entrenchment
  • Employee stock ownership
  • Corporate governance

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Employee stock ownership gives employees a voice and therefore may have a major impact on corporate governance. Thus, employee stock ownership may be a powerful mean to protect CEOs from both market for corporate control and dismissal threat. In this paper, we examine the relationship between employee stock ownership and CEO entrenchment. Following the recent French legislative changes, we use a comprehensive panel dataset of the major French listed companies over the 2009-2012 period. We document inverted U shaped relationships between employee stock ownership and CEO entrenchment. Board employee ownership representation also plays a role and increases the inflexion points of these curvilinear relationship.

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