Internationalisation of the Shareholding of Large Companies: Impact on the Function of Top Executives

Over the last two decades, the opening up of international financial markets to foreign capital, the wave of deregulation, and the process of privatisation have resulted in the internationalising of the shareholding structures of large companies. These international shareholders bring with them a particular culture, arising in the United States in the middle of the 1980s, which aimed at promoting the creation of shareholder value as being the prime corporate objective. The influence of international institutional shareholders on companies and top executives has been widely commented upon. Their increasingly powerful role in the capital of large French companies has seemed to destabilise national power networks and restricted the ability of top executives to conduct original, differentiated business strategies within their sector. The relative positioning of all stakeholders (not simply the shareholders) has allegedly been affected by the spread of the shareholder value culture, which, de facto, would weaken the ‘French compromise’, which aimed to maintain a certain balance between the different partners of the firm. This paper has several objectives. It intends to show that the functions of top executives have changed significantly over recent years as a result of the increasingly powerful role of international shareholders in the capital of the major French companies. We shall attempt to set out the reasons for these changes, and will highlight the facets of the top executive role where the impact of change has been most felt. We show that these changes do not only engender constraints, but also provide top executives with new opportunities, and that as a result it is wrong to conclude that their function has been weakened.