Corporate governance change and performance: The roles of traditional mechanisms in France and South Korea

Agency and symbolic management perspectives describe that the consolidation of shareholder-oriented mechanisms improves corporate performance, although they are not fully implemented. Nevertheless, firms in non-US countries still maintain their traditional governance mechanisms, such as the presence of controlling shareholders, government's influence or family's involvement in management. Using large corporations in France and South Korea, we examine the roles of such traditional mechanisms for corporate performance. Our analytic framework, which compares the effects of the above three traditional and shareholder-oriented mechanisms on firm performance, highlights the positive influence of the traditional mechanisms, with the exception of state ownership, on ROA or Tobin's q. The empirical findings imply that the continuation of traditional mechanisms could be partly attributable to their performance contribution. We therefore suggest that corporations should delineate the practical contributions of various mechanisms to performance, being balanced in adopting or constraining a specific mechanism in corporate governance change.