Mental Patterns, Corporate Finance and Institutional Evolution: The Case of the French Corporate Governance System

Since the middle of the nineteen-eighties, the French system of corporate governance has undergone some major transformations. Originally, it was dominated by the State's important weight in the structures constraining managerial discretion in some of France's largest firms. But, the public administration has increasingly retired from its active role in corporate governance matters. This paper addresses the question of a theoretical explanation of the observed phenomenon of the dynamics of governance. The conceptual framework we propose is to a great extent based on the economic theory of institutional change. It strongly emphasizes the role of so-called 'organizational entrepreneurs', who lead the initiative aiming at a transformation of existing structures. In this context, a country's shared mental pattern is, however, supposed to be a force enhancing path dependence. Theoretical propositions are deduced and applied to the case of the French corporate governance system. The analysis of the latter's evolution yields some encouraging results, indicating that the proposed theory seems globally consistent with empirical facts.