SSRN Id3324237

The Capital Market Consequences of Tenure-Based
Voting Rights: Evidence from the Florange Act∗

Thomas Bourveau† François Brochet‡ Alexandre Garel§
Tuesday 30th March, 2021
Abstract
We examine the consequences of a regulatory intervention aimed at generalizing

tenure voting in French public companies. The 2014 Florange Act departs from the
‘one share one vote’ principle by automatically granting double voting rights (DVR)
to shares held for at least two years. However, firms can opt out through an annual
meeting vote. We document three main findings. First, firms that adopt DVR by
default experience a decrease in long-term foreign institutional ownership offset by an
increase in insider/family ownership. Second, those firms significantly underperform
in terms of stock returns after Florange relative to those that reject DVR. Third,
their environmental and social performance deteriorates. Collectively, our evidence
casts doubt on the merit of regulation-induced tenure voting as a desirable corporate
governance mechanism. Instead, the results echo concerns that mandating double
voting rights can reinforce insider and blockholder entrenchment.
Keywords: Governance Regulation; Institutional Ownership; Corporate Myopia; ESG
JEL Classification: G32, G34

∗
We are indebted to Barry Adler (discussant), Matthias Breuer, Brian Bushee, Hans Christensen, Alex Edmans, Vivian
Fang, Fabrizio Ferri, Wei Jiang, Luzi Hail, Gilles Hilary, Colleen Honigsberg, Justin Hopkins, Gaizka Ormazabal, Christine
Panasian (discussant), Shiva Rajgopal, Rik Sen, Marti Subrahmanyam, Eric Talley (discussant), Daniel Wolfenzon, Wayne
Guay and participants at the 2018 Global Issues in Accounting Conference (University of North Carolina), the 2018 Columbia
University Burton Conference, the 2019 American Law & Economics Association Conference, the 2019 NYU-LABEX-SAFE
Workshop at ESCP Europe and Pantheon-Sorbonne University, the 2019 Corporate Governance Workshop at Northeastern, the
2019 Accounting Workshop in Bolzano, the 2019 Workshop on Corporate Governance and Investment (Oslo Business School),
the 2019 Conference on Empirical Legal Studies, the University of Pennsylvania (Wharton), and the Chinese University of
Hong Kong for helpful comments and discussions. All errors are our own. We acknowledge the General Research Fund of the
Research Grants Council of Hong Kong (Project Number: 16505017) for financial support.
†
Columbia University, Graduate School of Business - tb2797@columbia.edu
‡
Boston University, Questrom School of Business - fbrochet@bu.edu
§
Audencia Business School - agarel@audencia.com
Electronic copy available at: https://ssrn.com/abstract=3324237

1 Introduction
The optimal allocation of control rights in the modern public corporation remains a
point of contention between various stakeholders. This is especially true in global financial
markets, where deeply-rooted cultural and institutional differences in terms of ownership
structures and regulatory frameworks still prevail (see e.g., Franks, 2020). Globalization
has facilitated the adoption of corporate governance practices largely inspired by the Anglo-
Saxon model of dispersed ownership (Aggarwal et al., 2011), but critics worry about the
diffusion of potential downsides of the model, such as excessive capital market short-term
pressures and shareholder centricity.
One of the key mechanisms for investors to voice their preferences on corporate gover-
nance is shareholder voting.1 The allocation of voting rights among shareholders perfectly
illustrates the broader debate above, as different groups disagree on the best corporate vot-
ing regime. Institutional investors around the world support the dominant regime, one-share
one-vote (OSOV, hereafter). Despite a lack of theoretical or empirical support, some critics
suggest that OSOV may exacerbate short-term pressures in capital markets (e.g., Wong,
2013). We seek to contribute to this broad debate by examining the capital market effects of
a regulatory approach to generalizing an alternative to OSOV for listed firms, using the 2014
passage of the Florange Act in France that imposed tenure voting as the default regime.
Although departures from OSOV exist in various forms (e.g., dual class shares, pyramid
structures), an alternative voting regime has recently (re-)emerged: tenure voting, whereby
shares accrue greater voting power over time if held by the same holder. Proponents argue
that it rewards long-term shareholders while placating short-term oriented ones (Martin,
2017). Based on this premise, Silicon Valley venture capitalists recently created the ‘Long
Term Stock Exchange’ (LTSE) with tenure voting as one its initial pillars.2 Legal scholars
1
See Yermack (2010) and Ferri (2012) for literature reviews on shareholder voting.
2
See the SEC approval of the exchange: https://www.sec.gov/rules/other/2019/34-85828.pdf Interest-
ingly, tenure voting was tabled, likely in response to the comment letter by the Council of Institutional
Investors criticizing departures from OSOV.

have explored the merits of tenure voting as a mechanism to optimize voting rights in public
corporations (Dallas and Barry, 2016). Notwithstanding the limited evidence on its efficacy,
studies conclude that tenure-voting could constitute an alternative “middle ground” between
dual-class shares and OSOV governance regimes by giving investors a meaningful voice in
companies while addressing real and perceived issues concerning short-termism in financial
markets (Berger et al., 2017; Edelman et al., 2019). Yet, while tenure voting could be valuable
to some firms, there is a significant step between allowing it and making it the norm, and
no existing economic theory supports mandatory tenure voting as a desirable system.
In this paper, we examine the effect of the regulatory-induced adoption of tenure voting
by French listed firms on three dimensions: long-term oriented shareholding, market value,
and corporate decision making. In early 2014 the French government brought into force ‘The
Florange Act’. The Act grants double-voting rights to any shares held in a registered form
by the same shareholder for at least two years, provided that the company does not prohibit
double-voting rights in its bylaws.3 Before the adoption of the law, French listed firms
were allowed to amend their bylaws to voluntarily grant double voting rights to long-term
shareholders. A significant number of firms had opted for that regime. A number of firms,
however, did not grant double voting rights before the law and were subject to the change in
governance regulation. Firms could opt out from this new regime within two years through
a resolution at the shareholder annual meeting requiring a two-third majority. This leaves
us with three groups of firms which we label as follows: early adopters, default adopters and
rejecters.4
Our sample consists of 343 unique French firms headquartered and listed in France for
which we obtain data to test the effect of regulatory-induced changes in voting rights on
3
Throughout this paper, we use double-voting rights and tenure voting interchangeably.
4
Strictly speaking, Florange is not a quasi-natural experiment because of firms’ ability to opt out. How-
ever, because it unexpectedly raises the bar so high for opt-out resolutions to succeed, firms with anywhere
between one and two thirds of voting shares in favor of double voting rights are essentially assured to keep
tenure voting. This is why minority shareholders did not even attempt to put forward opt-out resolutions
in some firms. Hence, Florange still exogenously affects the balance of power between shareholders with
competing interests.

firms’ ownership structures. We hand-collect data on firms’ adoption or rejection of double
voting rights through online searches. Of the 101 companies that had not adopted double
voting rights prior to Florange, we find 77 that formally rejected it within the two-year
window. We obtain detailed shareholdings, governance, accounting, stock, and ESG data
from Thomson Reuters Refinitiv.
We start our empirical analysis by comparing early adopters of double voting rights with
firms subject to the regulation before it came into effect. Consistent with Belot et al. (2019)
and Becht et al. (2020), early adopters have a larger fraction of their shares held by a control-
ling individual or family but lower (direct or indirect) ownership by the French government.
Foreign institutional investors own significantly fewer of early adopters’ shares on average,
compared to default adopters. While this allocation of voting rights and ownership arose
endogenously, it is consistent with foreign institutional investors being less willing to invest
in firms where the voting structure allows (domestic) blockholders to maintain control with
fewer shares. Anecdotally, the Norwegian sovereign fund specifically states that it favors the
OSOV regime to minimize the risk to minority shareholders.5 General differences in terms
of corporate governance support this view. On average, early adopters are more likely to
have antitakeover provisions, a staggered board, and a golden parachute than OSOV firms.
Overall, they exhibit significantly higher entrenchment indexes and lower shareholder scores.
That is, firms with tenure voting exhibit poor governance practices, at least according to
standards endorsed by institutional investors. When we compare default adopters to rejecters
prior to the passage of the Act, the most significant differences are in terms of ownership
structure. Not only is insider ownership higher in default adopters, but also government
ownership, consistent with Becht et al. (2020). In contrast, institutional ownership, both
foreign and domestic, is lower than in rejecters.
5
In its 2012 Discussion Note, Norges Bank Investment Management—one of the largest institutional
investors in our sample and in the world—states, for example that “In most circumstances, the equal rights
of all shareholders, in proportion to their holding, will reduce the potential for conflicts of interests, mitigate
agency costs and avoid unnecessary costs of capital.” It concludes this section this way: “Ultimately, we
expect the board to implement one share class with each share having one right to vote.” (See Page 38).

To assess the capital market impact of Florange, we first examine changes in owner-
ship composition. Our focal group of interest is foreign institutional ownership. Foreign
institutions account for a large fraction of the French stock markets and are the de facto
marginal providers. Despite criticism that foreign capital may foster short-termism (Stiglitz,
2002), the evidence thus far points to the contrary. Aggarwal et al. (2011) find that positive
changes in foreign institutional ownership lead positive changes in firm-level governance.
Bena et al. (2017) document a positive effect of foreign institutional ownership on long-term
investment. In this paper, we reverse the link and examine whether foreign institutions’
investment choices are sensitive to regulatory-induced changes in governance regimes.
We use a difference-in-differences design comparing the change in ownership structure
across default adopters relative to either a pooled group of early adopters and rejecters or
only to rejecters in the period 2010-2013 versus 2015-2018 centered around the change in
voting regulation in 2014. A clear pattern emerges: we find that firms that automatically
adopt double voting rights experience a decrease in foreign institutional ownership. The
magnitude of the documented effect is economically important. Our baseline within-firm
estimate reveals that foreign institutional ownership is 3.81% lower for default adopters
relative to rejecters post Florange.
While foreign institutions behave, on average, as long-term oriented investors, not all
of them are (Dyck et al., 2019), and they are not necessarily the only ones. We examine
more comprehensively ownership patterns around Florange for default adopters compared
to rejecters. We find that the decrease in foreign institutional ownership is offset by an in-
crease in inside ownership, i.e., by controlling families or individuals. In contrast, we find no
increase in domestic institutional ownership. When we further decompose institutional own-
ership between long- and short-term subgroups (based on institutions’ portfolio turnover),
we only find a decrease in long-term institutional ownership - again driven by foreign in-
stitutions. This shift is consistent with long-term oriented institutions being sensitive to
governance (Bushee et al., 2014). Overall, we observe a shift in long-term ownership from

foreign institutions to insiders and families.
In the second part of our examination of Florange, we test the effect of the forced adoption
of double voting rights on firm value. When firms deviate from an optimal allocation of
voting rights by adopting the Florange mandate, this may decrease firm value if minority
shareholders discount shares due to an expected increase in the probability of expropriation.
However, there are at least two assumptions underlying this hypothesis. First, if the effect
follows strictly from the withdrawal of foreign outside capital, then it must be that the
supply of domestic capital is not sufficient for firms’ external funding needs.6 Second, it must
be that tenure voting makes a material difference to the expected probability of minority
shareholders’ expropriation. To test our conjecture, we form a portfolio that goes long
on rejecters of tenure voting and short on default adopters, either as of the passage of
the law or as of the implicit adoption and formal rejection of tenure voting. Consistent
with investors discounting shares due to a higher probability of expropriation, we find that
rejecters significantly outperform relative to default adopters after the change in regulation
by an economically significant risk-adjusted monthly return of around 0.5%.
Changes in ownership composition provide a partial view on the effect of regulatory-
induced tenure voting on the time orientation of capital markets. To test whether Florange
affected the horizon of corporate decision making, we examine changes in investment patterns
and corporate social responsibility around its adoption in our third and last set of multivariate
analyses. On the one hand, if Florange protects insiders from short-term capital market
pressures such as activists or hostile bidders, they might pursue more long-term oriented
or more socially responsible strategies. On the other hand, insofar as foreign institutions
have been shown to favor those strategies (Bena et al., 2017; Dyck et al., 2019; Luong et al.,
2017), their reduced ownership might presage less long-term oriented investment. We find
no evidence that default adopters invest more in R&D or capital expenditures than rejecters
6
This assumption seems reasonable given that (1) foreign investors already account for sizeable share of
the French stock market (Quang, 2015) and (2) French households are known for their limited willingness to
invest directly and indirectly in capital markets, in part due to cultural factors such as lack of trust (Guiso
et al., 2008).

after Florange. Furthermore, we find a statistically significant drop in environmental and
social scores for default adopters, suggesting that their ESG activities worsen relative to
those of rejecters (and early adopters). Lastly, we find a significant drop in Tobin’s Q.
Combined, while the evidence should be interpreted with caution because we only have ESG
data for a small set of firms and none of our proxies perfectly captures long-term orientation,
it is consistent with the observed patterns in terms of ownership and firm value.
Our paper contributes to the literature in several ways. First, our paper adds to a
burgeoning literature on tenure voting. Specifically, in response to regulatory initiatives
aimed at spurring the adoption of tenure voting, several papers examine the determinants
and consequences of firms’ choice of voting right allocation. Becht et al. (2020) find a similar
proportion of French firms going public with tenure voting before and after Florange. They
also find that 70% of firms that had a OSOV structure before Florange rejected tenure voting.
Becht et al. (2020) conclude that the Act did not substantially alter preferences for voting
right allocations even if it introduced frictions in the process. Our focus is on the 30% of
firms that switch to tenure voting by default. Our evidence indicates that firms switching
by default from OSOV to tenure voting see an increase in insider (i.e., controlling family
or individual) ownership primarily at the expense of long-term oriented foreign institutional
investors. Whereas Becht et al. (2020) find that default adopters have lower valuation on
average (i.e., in 2014 and 2016), we document a significant and persistent drop in firm value
for those firms between the pre- (2010-2013) and post-(2015-2018) Florange periods using
firm fixed effects. We attribute this relative valuation drop to minority investors’ concerns
with expropriation and poor governance (e.g., Shleifer and Vishny, 1997).
Our results also add to Bajo et al. (2020), who examine Italian firms after a 2014 law
allowed the adoption of tenure voting. Bajo et al. (2020) find that 91% of voluntary adopters
are family-controlled firms.7 While institutional investors are against tenure voting, they
do not exit the adopting firms. Controlling families decrease their stakes by about 2.5%
7
Similarly, Belot et al. (2019) find that in the pre-Florange period, voluntary adopters of tenure voting
among French listed firms are more likely to be controlled by insiders or families.

after adopting tenure voting, thus maintaining their control while reducing their exposure
to the firm’s idiosyncratic risk. An important distinction and plausible explanation for the
differences between Bajo et al. (2020) and our evidence is that the Italian regime is essentially
like the pre-Florange French regime. That is, Italian firms need a two-third majority vote to
adopt tenure voting. Family stakes are typically above 50% in Italian firms, meaning that
family owners already have a majority stake even without tenure voting. Hence, the marginal
cost of minority investor expropriation associated with tenure voting in Italian firms is lower
than in French firms treated by Florange.
Second, our results add more broadly to the literature on the ‘one share one vote’ prin-
ciple. There is a substantial theoretical literature on the resource allocation impact of cor-
porate voting regimes (Burkart and Lee, 2008).8 As Adams and Ferreira (2008) point out,
there is little empirical evidence on the determinants of ownership proportionality. This is,
in part, due to the lack of homogeneity in the voting structures – such as dual share classes,
cross ownership or pyramids – across firms and countries. Prior research has established that
deviations from that principle—when corporate insiders control more voting rights relative
to cash flow rights—lead to lower firm value and stock returns.9 In our French setting, double
voting rights first emerged as a market mechanism before being generalized for a subset of
firms by the Florange Act. Furthermore, all shareholders are technically eligible for tenure
voting, whereas other structures such as dual-class shares tend to indefinitely endow insiders
alone (Bebchuk and Kastiel, 2017). In terms of consequences, our evidence suggests that
generalized double voting rights are associated with a decrease in the value of outside equity
and no increase in long-term oriented investments.10
Third, our paper offers additional evidence on the effect of corporate governance regula-
tion. Larcker et al. (2011) find negative market reactions to governance regulatory changes
8
This theoretical literature focuses mostly on two consequences of voting regimes: takeover outcomes (e.g.,
Grossman and Hart, 1988; Harris and Raviv, 1988; Burkart et al., 1998) and the incentives of blockholders
(e.g., Burkart et al., 1997).
9
See Claessens et al. (2002), Lemmon and Lins (2003), Harvey et al. (2004), and Gompers et al. (2010).
10
This result is also consistent with the findings that optimal firm governance varies between different
firms within a country (e.g., Demsetz and Lehn, 1985; La Porta et al., 1998; Bruno and Claessens, 2010).

in the U.S. In line with their result, we find that regulation-induced governance changes
are costly. In our case, there is a double punishment: it has negative capital market con-
sequences and further fails to attract investors with a supposed long-term orientation. We
also add significantly to their findings because our setting pertains to voting regimes and
thus falls outside of the proxy access and executive pay types of events that they examine.
In a cross-country setting, Iliev et al. (2015) find that shareholder voting is an effective gov-
ernance mechanism in the presence of regulations that bind managers to implement voting
outcomes. Our paper differs from this study as we focus on one particular country where
regulation dramatically changed the voting power of certain investors.11
Finally, our study adds to the literature on the role of foreign institutions vis-a-vis cor-
porate governance, investment, and corporate social responsibility. While Aggarwal et al.
(2011) and Bena et al. (2017) document a positive effect of foreign institutional ownership
on corporate governance, we provide evidence on a reverse channel, where double voting
right adoption deters foreign institutional ownership and lowers firm value. In that sense,
our results complement the recent work by Aguilera et al. (2021). They find that Norway’s
sovereign wealth fund changed its investment policy to reduce its exposure to firms that did
not adjust their governance to the fund’s new explicit governance preferences. In our case,
institutional investors reduce their exposure to firms whose voting regime deviates from their
governance preferences due to a regulatory intervention. Our results likewise complement
Dyck et al. (2019) and Azar et al. (2020) who show that institutional investors can also
contribute positively to firms’ ESG performance. Overall, regulation-induced governance
changes that affect the allocation of voting rights do not seem to attract shareholders with
longer holding periods. Our results thus inform the (largely conceptual thus far) debate ini-
tiated in the legal literature about the merit of tenure voting as an anti-myopia mechanism
11
Additionally, in a global context, other recent regulatory initiatives have sought to impart upon share-
holders greater voting power – with ‘say on pay’ (SoP) laws around the world being a prime example. Correa
and Lel (2016) document significant changes in CEO pay practice and improvements in firm valuation fol-
lowing the adoption of SoP. While SoP seeks to address myopia from the managers’ incentives standpoint,
the Florange Act tackles it from the investor side – unsuccessfully if one assumes that is the regulator’s
primary objective.

(see, e.g., Berger et al. (2017) and Edelman et al. (2019) for a review).12
2 Institutional Background
On March 29 2014, the French parliament adopted the “Florange Act” in response to
events that happened in 2012 in the city of Florange (in Northeastern France).13 The
ArcelorMittal14 conglomerate decided to permanently shut down a set of blast furnaces.
Tensions arose when commentators argued that the plant was profitable and that its closure
primarily served to reduce the reported losses of the group due to several other underper-
forming debt-intensive acquisitions. This plant was under much public scrutiny as elected
President– and former head of the Socialist Party – Francois Hollande came on site during
his campaign to assure employees that they would not lose their job at a time where the
factory was facing temporary closure.
This situation led to the promulgation of a law package that contains three distinct chap-
ters: Chapter 1 requires companies to look for a potential buyer before being authorized to
close a factory in France.15 Chapter 2 facilitates the acquisition by employees of a subsidiary
or plant that a larger group would like to close. Finally, as the events in Florange were
supposedly initiated because of Arcelor-Mittal trying to boost its short-term performance
in response to pressure from the financial markets, Chapter 3 introduced some measures
to promote the long-term orientation of shareholders in firms listed on the French stock
market.16
12
It should be stressed that our results should not be interpreted as tenure voting being a non-desirable
governance regime per se. As discussed in Edelman et al. (2019), it could be a useful governance regime
under certain circumstances. Our results highlight the failure of regulation-induced tenure voting to attract
long-term shareholders, especially in a market with high ownership concentration and the government as an
investor with competing interests.
13
The official name of the law is “Loi 2014-384 du 29 mars 2014 visant à reconquérir l’économie réelle”.
14
In 2006, the Indian conglomerate Mittal group (controlled by Lakshmi Mittal) acquired Arcelor, a
European group in the steel industry that employed 100,000 people in 60 countries.
15
This section of law was repealed by the Conseil Consitutionnel (the French Supreme Court) on the
grounds that is was against the free entreprise principle.
16
ArcelorMittal argues that the reasons behind the plant closure were (1) high production costs and (2)
weak demand for steel in continental Europe.

In Chapter 3, the Florange Act automatically grants double-voting rights to any shares
held in a registered form by the same shareholder for at least two years, provided that
the company does not prohibit double-voting rights in its bylaws. The two-year holding
period triggering the automatic acquisition of double-voting rights started on April 1, 2014.
Double-voting rights started to be automatically applied March 31, 2016. Any French listed
company that did not prohibit double-voting rights in their by-laws prior to the Act or did
not opt out by March 31, 2016 is subject to the automatic regime. In order to formally
reject the automatic granting of double voting rights, at least two thirds of shareholder
votes (supermajority) must be cast at the annual meeting in favor of a resolution stating
that the one-share-one-vote principle prevails. Before the adoption of the Florange Act,
a supermajority was required to voluntarily implement double-voting rights. As a result,
in the pre-Florange period a minority shareholder (or a coalition of minority shareholders)
with a third of the votes would not be able to impose the adoption of double-voting rights.
The Florange Act basically reversed the situation by mandating double-voting rights and
imposing a super majority to opt out. Thus, a group of minority shareholders holding a
third of the voting rights would be able to maintain tenure voting and thwart attempts to
revert to the ‘one-share one-vote’ regime.
Legal scholars view tenure voting as an intermediate mechanism on the spectrum of
corporate voting structures Dallas and Barry (2016); Edelman et al. (2019). That is, while
it does not fully align cash flow and voting rights as OSOV does, it creates a narrower
wedge than that of dual class share structures. The theoretical value of tenure voting hinges
on its ability to prevent the agency costs of expropriation from deterring long-term oriented
minority shareholders. The first set of parameters is the presence of a controlling shareholder,
the size of her stake, and her intention going forward. If an under-diversified controlling
shareholder maintains her stake and increases her voting power via tenure voting, then it is
more likely that she will undertake projects that reduce her own risk but are value destroying
for diversified minority investors (e.g., diversifying acquisitions). However, tenure voting may
10

also allow a controlling shareholder to reduce her stake—either via partial exit or dilution
via equity issuance—while maintaining her voting power. In that case, to the extent that
long-term oriented shareholders fill the void, tenure voting could result in better incentive
alignment among shareholders. Using data from 12 U.S. firms, Dallas and Barry (2016) find
that insiders enjoy greater power at first but reduce their ownership and control over the
long run. Using simulations, Edelman et al. (2019) find that management can retain control
and be shielded from hostile takeover threats if they keep a stake of at least 20-30%. Both
studies tentatively conclude that tenure voting can be a worthy compromise for long-term
institutional investors.
However, since Florange did not happen in a vacuum17 , the French context may yield
different outcomes from theory.18 While the French government promoted the regulation as a
chance to reduce excess short-term pressure, it is unclear whether short-termism is pervasive
in French equity markets, even among firms with no disproportionate voting rights. Instead,
studies focused on France suggest that firms with disproportionate voting rights engage in
lower quality M&A, especially for diversifying deals (Thraya and Albouy, 2012). Since the
Florange-ArcelorMittal events had nothing to do with voting rights, the connection is all the
less evident. In contrast, critics of the law argue that the focus on double voting rights is a
self-serving move by the French government. Consistent with that claim, Becht et al. (2020)
document that the government was pivotal in adopting double voting rights for firms that
had OSOV prior to Florange, sometimes in spite of resolutions to reject the adoption.19
After the adoption of the law and despite the strong support for double-voting rights by
17
Two reports published in 2012 recommended the generalization of double voting rights for French listed
companies. The Gallois (2012) report was requested by then Prime Minister Jean-Marc Ayrault to evaluate
the state of the French economy and its competitiveness. Concurrently, the left-leaning think tank Terra Nova
also published a report by Schweitzer and Ferrand (2012) making recommendations for a “comprehensive
competitiveness policy for France”.
18
For a detailed historical account of state and family ownership in France, please refer to Murphy (2005).
19
For instance, the government strategically purchased 1.23bn worth of shares in car manufacturer Renault
to increase its stake from 15% to 19.7% (and 23% of voting rights) and in time to be able to opt for the
double rights regime within Renault, despite 60.53% of the votes being cast against it. Similar cases occurred
in other major French listed firms, including Alstom, where large public and private minority shareholders
blocked attempts to opt out of the new voting regime.
11

the French government, some investors immediately pushed to overturn Florange’s imple-
mentation. For instance, a campaign led by French institution PhiTrust and backed by 19
institutional investors from countries such as Germany, the UK and Switzerland and that
collectively manage €2,300bn in assets, tried to introduce resolutions to maintain the ‘one
share one vote’ system on the agenda at several companies’ annual meetings.20 They viewed
this change in governance structure as a protectionist tool used by dominant (minority)
shareholders to keep control of the company while reducing the rights of minority sharehold-
ers. They were particularly concerned with issues related to minority shareholders’ dilution
and executive compensation, another culprit in the pervasiveness of corporate myopia (e.g.,
Edmans et al., 2017).
A technical yet noteworthy aspect of the Florange Law is the requirement that eligible
shares be held in registered form, which creates a significant barrier for institutional investors,
especially foreign ones, to qualify for double voting rights.21 Indeed, shares must be registered
directly with the company, which is prohibitively expensive and administratively burdensome
for diversified shareholders. It also increases settlement periods in the case of share sales,
thereby adding transaction costs and potential liquidity constraints. Furthermore, the lack of
integration with international voting platforms effectively disqualifies cross-border investors
from double voting rights.22 Lastly, loyalty shares preclude securities lending, which is a
significant source of competitiveness for index funds – which are otherwise long-term investors
by design.
In light of the above, we hypothesize that foreign institutional ownership will decline
in firms that adopt double voting rights by default after the passage of the Florange Act.
That is, we consider both (i) the disconnect between the purported intent of the law (en-
20
See https://www.ft.com/content/05314dfe-e27d-11e4-ba33-00144feab7de
21
When the French Commercial Code was first amended in 1932 to allow double voting rights, such rights
were only granted to shareholders of French nationality (Mosca, 2019). Although Florange removed the
nationality restriction, the historically protectionist nature of double voting rights may have contributed to
foreign investors’ skepticism.
22
See for instance for Blackrock: https://www.blackrock.com/corporate/literature/whitepaper/blackrock-
the-debate-on-differentiated-voting-rights.pdf
12

couraging long-term oriented shareholding) and its suspected motive (enhancing the French
government’s voting power in key holdings) and (ii) the logistical frictions that prevent out-
side investors from qualifying for double voting rights as deterrents to a subset of long-term
oriented investors.
Furthermore, to the extent that foreign institutions represent a major stakeholder in
French equity markets (Quang, 2015) and that they have strong preferences for ‘best practice’
corporate governance (Aguilera et al., 2021), we expect the reduced interest for the shares
of default adopters to translate into a loss of firm value. Said differently, we expect some of
the existing investors to ‘vote with their feet’ and others to discount the shares by pricing
loyalty shares as a control enhancement mechanism that increases the risk of private benefit
extraction from insiders.
3 Data
3.1 Sample Selection
To construct our sample, we start with the universe of French stocks on Thomson Refinitiv
between 2010 and 2018. We then require firms to be headquartered in France and exclude
companies whose shares are traded on Euronext Growth or Euronext Access because of
their small size (market capitalization lower than 150 million euros and of 68 million euros
on average). We require firms in our sample to be listed as of the beginning of 2014 and to
have accounting, financial, and ownership data available at least for that year.23 Accounting,
financial, and ownership data are from Thomson Refinitiv. We then manually collect details
regarding the existence of double voting shares from firms’ annual reports in the two years
before and after the Florange Act (2014). We obtain information on firms’ voting structures
from their websites and the Journal of Official Announcement website (BALO). We also drop
23
In Online Appendix Table 4, we strengthen this criteria and re-estimate our specifications by imposing
that all firms in our sample have data available either in the four-year or eight-year period centered around
2014, the regulation year.
13

firms for which we cannot find the exact date of resolution vote on double-voting rights as
stipulated by the Florange Act (BALO). We follow Bena et al. (2017) and drop utilities and
financials, since these industries are regulated. Please refer to Appendix A for more details
on the steps described above. This procedure leaves us with a panel of 343 unique firms over
the 2010-2018.24
3.2 Measures
Double-voting rights To assess whether a company granted double-voting rights to

shares held for a minimum period of time before the introduction of the Florange Act (March
29, 2014), we manually look at all companies’ by-laws in their 2013 annual reports. For com-
panies that do not have double-voting rights in their by-laws prior the introduction of the
Florange Act, we then collect the resolutions voted in annual meetings over the April 2014
to the April 2016 period — the period during which firms were allowed to reject double
voting rights — and identify those that expressly rejected the introduction of double-voting
rights and those that did not. Ultimately, the Florange Act requires firms to permanently
adopt double-voting rights either because investors failed to reject the new governance regime
through a vote at the annual meeting or because investors did not vote on the matter.
In our sample, 70.5% (242 out of 343) of the companies already have double-voting
rights in their by-laws prior to the introduction of the Florange Act. Among the rest, 76%
(77/101) voted a resolution in an annual meeting between April-2014 and April-2016 to reject
its implementation, and thus still do not have double voting rights by the end of 2016. 24%
(24/101) of the companies adopted double-voting rights over the period 2014-2016 because
of the Florange Act.25 Notice that one company, Legrand SA, had double-voting rights in
24
Online Appendix Table 1 provides the full list of firms’ identifiers used in our sample.
25
This distribution is in line with the descriptive statistics from two other studies on the Florange Act:
Belot et al. (2019) use a larger sample and report that 69% of the firms in their sample voluntarily adopted
double-voting rights before the Florange Act; Becht et al. (2020) use a smaller sample than ours based on
the SBF120 index and find that 58 out of the 104 companies from the index had implemented double voting
rights before the adoption of the Florange Act. We compare the subsample of firms in our sample and that
of Becht et al. (2020) as listed in their Appendix and find that our manual data collection lead to the same
14

place before the Florange Act and removed them after the introduction of the Florange Act.
Another company, Claranova, initially rejected tenure voting in 2015 but voluntarily adopted
it in 2017, after the Florange deadline. Neither Legrand nor Claranova affect our results. In
Online Appendix Table 2, we list the French companies subject to the Florange regulation
and classify them between the group of default adopters (those that did not opt out of the
new voting regime) and rejecters (those that maintained the “one-share one-vote” regime
through a vote during the annual meeting).
Ownership Composition We obtain ownership data from Thomson Refinitiv. For each
firm, we collect ownership data at the end of the fiscal year for the 2010-2018 period. This
accounts for around 67% of the total ownership of the firms in our sample. It represents
246, 716 firm-investor-year observations (22,941 unique investors). We identify foreign in-
vestors based on the country in which the investor is headquartered. We further screen
investors by type and classify the following as institutional investors: “Bank and Trust”,
“Endowment Fund”, “Foundation”, “Hedge Fund”, “Independent Research Firm”, “Insur-
ance Company”, “Investment Advisor”, “Investment Advisor”, “Investment Advisor/Hedge
Fund”, “Pension Fund”, “Private Equity”, “Research Firm”, “Sovereign Wealth Fund”, and
“Venture Capital”. We thus exclude “Individual Investor”, “Corporation”, “Holding Com-
pany”, and “Other Insider”. For foreign investors, these types represent a very small group.
Not all foreign investors necessarily hold shares over long periods. Following Derrien et al.
(2013), we identify long-term (short-term) investors based on their portfolio turnover.26 For
each investor, we create a dummy variable high (low) turnover, that indicates whether its
portfolio turnover is greater than 100 % (lower than 50%). In Online Appendix Table 3
allocation of firms between early adopters, voluntary rejecters and default adopters.
26
Prior research in accounting and finance typically relies on the classification of institutional investors in
various types: transient, quasi-indexer, and dedicated (e.g., Bushee, 1998; Bushee and Noe, 2000; Bushee,
2001). Since this classification is not available in an international (French) setting, we re-create an horizon
classification using portfolio turnover. Note that in untabulated analyses we find similar results if we classify
as long-term orientation based on the following reported type as per Thomson Reuters Refinitiv: “Pen-
sion Fund”, “Sovereign Wealth Fund”, “Endowment Fund”, “Foundation”, “Insurance Company”, “Private
Equity”, and “Venture Capital”.
15

Panel A, we list the names of the 20 largest foreign institutional investors in the French
stock market as of 2013 and report their orientation based on the Derrien et al. (2013)
measure.27
Finally, since our tests are at the firm-year level, we aggregate the number of shares
owned by foreign institutions and divide it by total common shares outstanding. Likewise,
ownership by categories of domestic shareholders (“Insiders and Individuals”, “French Gov-
ernment”, “Institutional Investors”) is the percentage of shares held in the company by
each group of investors. Notice that for French government ownership, we include not only
“Government of France” but also “Caisse des Dépôts et Consignation”, “Bpifrance Investisse-
ment”, and “Bpifrance Participations S.A.”, because these entities are arguably under the
direct influence of the French government and anecdotal evidence suggests that they have
been strategically used in the wake of the Florange Act (see footnote 19). For some analyses,
we also aggregate the ownership of specific subgroups of investors based on their turnover.
See Appendix B for detailed variable definitions.
4 Results
4.1 Descriptive Statistics
Table 1 reports firm-level summary statistics for our full sample. We winsorize continuous
variables at the 1st and 99th percentiles. The French equity market exhibits a high degree
of ownership concentration, with average inside ownership of 33.32%. Interestingly, foreign
institutional ownership (9.63%) exceeds domestic institutional ownership (6.05%), which
reflects the dominance of the French state-funded pension regime. Sample size varies as
ESG data is only available for a subset of firms.
We start our empirical analysis by comparing firms’ characteristics before the adoption
27
In the remaining panels of Online Appendix Table 3, we provide more information about the investors
in our sample, including the list of the largest French shareholders as of 2013, the distribution of investors
per country of origin and types.
16

of the Florange Act across groups. Specifically, we first compare early adopters and non-
voluntary adopters (that will then be divided between default adopters and rejecters) in the
year 2013, i.e., right before the change in regulation. The univariate comparisons reported
in Table 2 Panel A reveal that foreign institutions own 8.51% of early adopters’ shares
during that period, compared to 10.93% for non-voluntary adopters, although the difference
is marginally significant (p=0.11). In contrast, consistent with the results in Belot et al.
(2019), early adopters are more likely to have a large fraction of their shares held by a family
and/or insiders (35.90% vs. 26.89%). Non-voluntary adopters also exhibit greater ownership
by the French government. For firms with governance data available, early adopters have
a significantly lower shareholder score, primarily driven by a significantly greater number
of antitakeover devices (2.15 versus 0.89) and the presence of a golden parachute (36% vs.
15%).
In Table 2 Panel B, we break down the group of firms subject to the regulation be-
tween default adopters and voluntary rejecters, and report univariate comparisons of the
two groups, also as of 2013. Default adopters exhibit significantly lower foreign institu-
tional ownership (8.51% vs. 11.67%) but higher family and/or insider ownership (36.06%
vs. 24.08%) and higher government ownership (5.51% vs. 1.11%). The differences in terms
of ownership composition are consistent with the French government playing a pivotal role
in the adoption of double voting rights by default (Becht et al., 2020). Firms are otherwise
comparable on standard covariates such as size, profitability, and leverage.
Lastly, Table 2, Panel C further examines the differences between early adopters and
non-voluntary adopters in terms of corporate governance using regression analyses during
the 2010-2013 time period. The coefficient of interest is Tenure-Based Voting, which equals
one for firms that voluntarily adopted double-voting rights prior to Florange. Consistent
with the univariate differences observed in Panel A, the significantly positive coefficients in
columns 1, 2, 5, 6, and 7 indicate that voluntary adopters have, on average, more antitakeover
protections, are more likely to have a staggered board and a golden parachute, a higher
17

entrenchment index, and a lower shareholder score. That is, those firms exhibit corporate
governance characteristics that are generally associated with entrenching insiders rather than
maximizing firm value from minority shareholders’ viewpoint (Gompers et al., 2003; Bebchuk
et al., 2009).
4.2 Ownership Composition
To identify the effect of double-voting rights (i.e., tenure voting) on ownership compo-
sition, we use the introduction of the Florange Act as an unexpected change in the market
equilibrium of voting right allocations.
We first plot the time-series of foreign institutional ownership (in levels) for early adopters,
default adopters, and rejecters. In Figure 1, the red upper round dotted line represents the
level of foreign ownership for rejecters. The black solid line and the dashed green line plot
the level of foreign ownership for early adopters and default adopters, respectively. While
the three groups differ in levels at the beginning of our sample, they clearly follow a similar
pattern. All groups experience a small decrease between 2010 and 2011, and then experience
a similar growth rate (of around 0.5%) per year until 2014. After 2014, the growth rates in
foreign ownership for early adopters and rejecters remain positive and stable. On the other
hand, the trajectory initially decreases and then flattens for several years for default adopters.
Towards the end of our sample period, all three groups exhibit a similar positive growth rate
in foreign institutional ownership. However, default adopters do not recover the initial loss
in institutional ownership, suggesting that, against the continuous upward trend in foreign
ownership for the other groups, these firms experience a lasting relative decrease in overall
level of foreign ownership post Florange. In Figure 2, we plot inside ownership for the same
groups. Consistent with the univariate results in Table 2, inside ownership is significantly
lower in rejecters compared to adopters, both voluntary and default. However, while inside
ownership remains flat throughout the sample period in rejecters and early adopters, there is
a roughly 5% jump for default adopters around the passage of Florange. This pattern stands
18

in contrast to Bajo et al. (2020), who find that family ownership decreased for voluntary
adopters of tenure voting in Italy. The two figures suggest that the passage of Florange led
to a shift in ownership composition for default adopters. Next, we turn to our multivariate
tests and estimate the following empirical model:
P ct Ownership T ypeit = β0 + β1 P ostit X Def ault Adopters + Xit + αi + γt + it
In this model, the dependent variable is the fraction of shares outstanding owned by
a given set of investors (foreign institutions, domestic institutions, inside individuals and
families, French Government) for firm i during year t. Post is a dummy variable that takes
the value of one for observations that fall after the adoption of the Florange Act (2015 to
2018), and zero otherwise (2010 to 2013).28 Default Adopters is a dummy variable that equals
one for firms that did not opt out of the new voting right regime and thus have implemented
double voting rights after the adoption of the Florange Act. Xit is a set of time-varying
firm level control variables. We follow Bena et al. (2017) to select our vector of control
variables, including size, leverage, market-to-book, dividend policy, free cash flow, cash,
asset tangibility and MSCI inclusion.29 The model includes firm fixed effects (αi ) and year
fixed effects (γt ). Firm fixed effects account for time-invariant firm characteristics, while year
fixed effects account for time-varying factors that could affect both the dependent variable
and the allocation between default adopters and our benchmark group. Our coefficient of
interest, β1 , captures the change in ownership by a given subset of investors for default
adopters relative to observations from the control group of rejecters.30
28
It is common practice in difference-in-differences research designs with a single event to omit the year of
the treatment to reduce the noise in the sample. See Huang et al. (2020) for a recent example. In untabulated
tests, our results are robust to including the year 2014 in our sample.
29
We also include leverage to our specifications, since debt is known to play a disciplining governance role
in the case of non-evenly distributed control rights (Dey et al., 2016). Since information on foreign sales is
missing for many firms in our sample, unlike Bena et al. (2017), we do not include this variable as a control.
Our results are robust to including this variable using a smaller sample of firms.
30
In our main specification, the control group consists of rejecters, so that we only compare firms subject to
regulation. However, we also run our tests using an extended sample by pooling rejecters and early adopters
in the control group. Unless otherwise stated, the results are qualitatively similar using either specification.
19

Table 3 reports regression estimates of Model (1). In Panel A, the dependent variable is
foreign institutional ownership. In the first column, we do not include control variables to
avoid ”bad controls” biasing our estimate of β1 (Angrist and Pischke, 2014). The coefficient
on Default Adopters x Post is negative and statistically significant at the 1% level. Default
adopters experience a drop in foreign institutional ownership after Florange of 3.81% relative
to rejecters. In the second column, we add time-varying firm-level covariates and find that
both the magnitude and the precision of our effect remains stable. In the next two columns,
we reach a similar conclusion when using the extended control group—early adopters and
rejecters—albeit with a lower economic magnitude.
In Panel B, we change the dependent variable to French institutional ownership (column
1), insider ownership (column 2), and French government ownership (column 3). The only
significant coefficient on Default Adopters x Post is in column 2, indicating that (French)
insider ownership increases significantly by 4.31% on average for default adopters relative
to rejecters. Combined, the results in panels A and B suggest that, upon adopting tenure
voting by default, insiders consolidate their control over the firm at the expense of foreign
institutions.
As not all foreign institutions may be long-term oriented, we further examine changes
in ownership composition by splitting institutions based on their ex ante portfolio turnover
prior to Florange. Institutions with a turnover below (above) 50% (100%) are deemed
long- (short-) term oriented. We choose this cutoff because tenure voting as instated by
Florange kicks in after two years, and therefore should be enticing to institutions that have
a portfolio turnover of less than 0.5. In Panel C, the dependent variable is ownership by
low-turnover foreign institutions (column 1), low-turnover domestic institutions (column 2),
high turnover foreign institutions (column 4), all low-turnover institutions (column 3), high-
turnover domestic institutions (column 5), and all high-turnover institutions (column 6).
The only significant coefficients on Default Adopters x Post are in columns 1 and 3. That is,
default adopters experience a significant decrease in ownership by low-turnover institutions
20

(as per column 3), the effect being entirely driven by foreign institutions (as per column 1).
Lastly, we examine whether the change in long-term foreign institutional ownership doc-
umented above stems from existing investors exiting the firms or a lower intake of new
investors. It stands to reason that existing investors long-term investors would prefer to
stay, since they could technically benefit from tenure voting. However, as mentioned in
Section 2, the share registration requirement may still deter them. Panel D reports the
results where we split long-term foreign institutional ownership between investors that were
present in 2014 (column 1) and those that were not (column 2). By construct, the dependent
variable in column 2 is equal to zero in the pre-Florange period. The results indicate that
default adopters experience a significant decrease in ownership by existing long-term foreign
institutions (-2.09%) and a relatively lower influx of new ones (-1.71%). That is, the drop
in long-term foreign institutional ownership documented in Panel C is roughly evenly split
between existing and new investors. Said differently, by adopting tenure voting by default,
those firms lose part of their long-term oriented minority investors and fail to attract new
ones. Collectively, the evidence in Table 3 suggests that firms adopting tenure voting because
of Florange experience a net loss in long-term outside investor ownership offset by net gain
31
in inside ownership.
We decompose the dynamics of the effect we document in Table 3 to investigate the
existence of a differential trend in foreign institutional ownership pre-Florange. We do so by
interacting the Default Adopters indicator with year indicators, using 2010 as the benchmark
year. We tabulate our results in Panel A of Table 4. Using the baseline sample in column
(1), we find that our coefficients of interest are systematically insignificant at conventional
levels in the pre-Florange period. This multivariate result is in line with the univariate
evidence from Figure 1 which shows that, despite differences in the initial level of foreign
31
To further reconcile our results with those of Bajo et al. (2020), we split the sample based on in-
sider/family ownership. In untabulated tests, we find a particularly strong drop in foreign institutional
ownership (-9.46%) for default adopters where the controlling shareholder owns between 20 and 50% of
shares outstanding. The effect of Florange is most acute in those firms because it allows them to adopt
tenure voting even if a majority of shareholders is against it. In contrast, Italian firms must obtain a
supermajority to adopt tenure voting, as did French firms before Florange.
21

institutional ownership across groups, the trend was increasing for all three groups before
2014. Furthermore, the results in Table 4, Panel A suggest that the difference in trends
for our treatment versus control group started immediately at the beginning of the post-
regulation period.32 Taken together, the results in Figure 1 and Table 4, Panel A suggest
that we find no violation of the parallel trend assumption and that our documented effect
did not precede the regulation but rather emerged in the years after its promulgation.
To ensure the robustness of our inferences, we further evaluate the risk that our results
are driven by confounding factors. We apply the coefficient bounding procedure from Oster
(2017) to assess the extent of omitted variable bias. This procedure tests the sensitivity of
the coefficient estimate to the inclusion of additional controls, while considering the change
in R-square across regression specifications. The underlying assumption is that concerns for
omitted variable bias lessen as the empirical model gets closer to explaining all of the variation
in the dependent variable. Oster (2017) developed a test statistic evaluating the stability
of the coefficient estimate under reasonable assumptions about the maximum attainable R-
square. We report the outcome of the Oster (2017) procedure in Panel B of Table 4 following
the format in a recent study by Heimer et al. (2019). Our interacted coefficient of interest
(Default Adopters x Post) successfully passed this test of coefficient stability. Indeed, we
find that the value δ is greater than one (4.68).33 This result provides statistical evidence
that our baseline regressions are unlikely to suffer from concern over omitted variable bias.34
32
In our extended sample (i.e., when we include early adopters in the control group), we find similar results:
no statistical differences pre-regulation and a negative and statistical difference between default adopters and
the pooled group of early adopters and rejecters in the post-regulation period.
33
We calculate δ ∗ such that we get a treatment effect for our variables of interest that is zero (β = 0). This
∗
δ denotes the degree of selection on unobservables relative to observables that would be necessary to explain
away the estimated coefficient. The calculation of δ ∗ requires assumptions about the maximum attainable
R-square, R-Square max. Based on a meta-analysis of published empirical research, Oster (2017) suggests
that R-Square max be set equal to 1.3 times the R-square of the regression model that includes the full set
of available and reasonable controls (a R-square max of 1 in our case since our baseline unadjusted R-square
is 0.784 in column (2) of Table 3, Panel A). Values of δ ∗ greater than one indicate that it is unlikely for the
coefficient estimates to be confounded by selection on unobservables.
34
In Online Figure 1, we further ensure the robustness of our findings by re-estimating our baseline model
and excluding each firm from the group of default adopters one by one.
22

4.3 Portfolio Tests
To examine the value implication of the introduction of double-voting rights by default, we

form portfolios that go short on default adopters and long on rejecters. We consider various
portfolio strategies. If the rejection (adoption) of DVR is positive (negative) for shareholder
value, one could exploit it in a portfolio strategy. Such a portfolio should generate a positive
return in excess of what can be explained by standard market factors (which are not directly
related to the value implications of DVR).
First, we assume that investors can perfectly forecast, at the time the Florange Act is
passed, which firms will reject them or not. We build equally-weighted and value-weighted
portfolios long on firms that investors assume will reject DVR and short on firms they assume
will not reject them. The portfolio is constructed as of the beginning of April 2014. We then
regress the monthly portfolio returns on a four factor market model (the three Fama and
French (1993)’s factors plus the Carhart (1997)’s momentum factor and a liquidity factor
(e.g., Pastor and Stambaugh, 2003) over 33, 45, 57 months, that is until 2016, 2017, and
2018, respectively.
The Fama-French factors for the French stock market are estimated following Fama and
French (1993)’s methodology. MKTR is the excess return on the market, value-weight return
of all French stocks listed on Euronext (Segment A, B, and C) at the beginning of month t
(in excess of the risk-free rate for one-month French government bills). The other two Fama-
French factors are constructed using 6 value-weight portfolios formed on size and book-to-
market, for the same universe of French stocks, as of the beginning of month t. SMB (Small
Minus Big) is the average return on the three small portfolios minus the average return on the
three big portfolios. HML (High Minus Low) is the average return on the two value portfolios
minus the average return on the two growth portfolios. MOM is obtained by subtracting
the equal-weighted average of the lowest performing firms from the equal-weighed average of
the highest performing firms based on prior 12-month average of returns, as of the beginning
of month t. To obtain LIQ, we first measure a stock’s liquidity following Amihud (2002)
23

as the ratio of absolute return to volume. For a given month, we classify stocks in the top
and bottom tercile in terms of liquidity as liquid (TL) and illiquid (BL) stocks, respectively.
Then, we obtain the illiquid minus liquid factor by mimicking the risk factor in returns
in relation to liquidity, as the difference between the simple value-weighted average of the
monthly returns on the difference of illiquid and liquid stocks.35
Table 5, Panel A, reports the results. We use Newey–West standard errors with a maxi-
mum lag order of autocorrelation of 3. We observe a positive and significant (p<0.01) alpha
for all specifications. That is, betting against (for) firms adopting (rejecting) DVR generates
shareholder value over time that cannot be explained away by standard portfolio factors.
The lowest alpha estimate is around 0.5 % a month. Consistent with investors discounting
shares due to a higher probability of expropriation, we find that default adopters signifi-
cantly underperform relative to rejecters after the change in regulation by an economically
significant risk-adjusted monthly return.
In Panel B of Table 5, we report the results of a similar portfolio test, whereby we do
not assume that, at the time the Florange Act is passed, investors can perfectly anticipate
which firms will reject DVR. Instead, we construct a portfolio that starts shorting default
adopters as of April 1, 2014 (for most of these firms we do not have a date of resolution
vote) but takes long positions on rejecters as soon as the outcome of the resolution vote
on DVR is known. Although this strategy is more conservative because investors are likely
to start pricing the consequences of DVR rejections earlier, we still document a positive
and significant outperformance, however restricted to the longer time frame for Panel B (57
months), consistent with investors starting to react at the time of the announcement.
We seek to alleviate the concern that our results could be driven by persistent differences
in the two groups of firms (default adopters versus rejecters) that would translate into a
35
Illiquid stocks include the following combinations: BL/L/S, BL/M/S, BL/H/S, BL/L/B, BL/M/B,
BL/H/B; while liquid stocks correspond to the following combinations: TL/L/S, TL/M/S, TL/H/S,
TL/L/B, TL/M/B, TL/H/B, where H refers to the High portfolio, L refers to the Low portfolio, S refers to
the Small portfolio, B refers to the Big portfolio, BL refers to the portfolio of illiquid stocks, and TL refers
to the portfolio of liquid stocks.
24

significant portfolio alpha (i.e., group-wise characteristics such as the presence of insiders
could be discounted above standard factors). To that end, we run a placebo portfolio strategy.
More specifically, the portfolio takes a long (short) position on firms that will reject (adopt)
DVR as stipulated by the Florange Act but between January 2011 and March 2014. Table 5,
Panel C, reports the results of the portfolio test. We do not find any portfolio outperformance
over this period, confirming that the outperformance of rejecters relative to default adopters
is specific to the post-Florange period.
4.4 Corporate Decisions
The results thus far suggest that default adopters of tenure voting experience lower stock
performance due to minority investors’ concerns with their relative loss of ’voice’. However,
as proponents argue that tenure voting can shield managers from short-term pressures, we
complete our analysis by looking at corporate investment decisions and more broadly at
sustainability in terms of environmental and social factors. If investors show relatively less
patience towards firms’ long-term investments and ESG, then we might in fact observe that
default adopters engage in more long-term oriented investments that typically have more
distant and uncertain payoffs.
Table 6 reports the results for our examination of Florange’s (indirect) effect on long-term
investment. We replicate our main difference-in-difference design by replacing ownership
characteristics with proxies for long-term orientation. In Panel A, column 1, we examine
capital expenditures. Following Bena et al. (2017), given that the R&D expense variable
is missing for most firms in our sample, we create a CAPEX plus R&D variables and use
it as an alternative measure of long-term investment in column 2.36 The coefficient on
Default Adopters x Post is insignificant. That is, default adopters of tenure voting neither
increase nor decrease their investments after Florange relative to rejecters. To complement
the investment and stock return tests, we also examine firm value—as proxied by Tobin’s
36
Although we would like to examine R&D in conjunction with meeting-or-beating expectations (Bushee,
1998), the intersection of firms reporting R&D and covered by analysts in our sample is too small.
25

Q—as a dependent variable. In columns 3 and 4 (with the natural logarithm of Tobin’s Q in
column 4), we find a negative and significant coefficient on Default Adopters x Post. That
is, default adopters of tenure voting experience a relative drop in firm value after Florange,
consistent with the portfolio tests from Table 5.
Next, we examine the other two pillars of ESG, i.e., environmental and social performance
using Asset4 data. Note that we only have data for a subset of firms. Panel B reports the
results for environmental performance. The coefficient on Default Adopters x Post is negative
and significant in all four columns. That is, default adopters of tenure voting experience
deteriorating environmental performance after Florange relative to rejecters (column 1),
the effect being driven by their resource use (column 2), emissions (column 3), and green
innovation (column 4). The effect in column 1 corresponds to about 31.5% of the cross-
sectional standard deviation of the environmental score in the baseline sample (19.88).
Table 6, Panel C reports the results for social performance, also using Asset4 data. The
coefficient on Default Adopters x Post is negative and significant in three of the columns.
That is, default adopters of tenure voting experience deteriorating social performance after
Florange relative to rejecters (column 1), the effect being driven by their workforce score
(column 3) and community score (column 5). In terms of magnitude, the effect is comparable
to that in Panel B.
Hence, combined, the evidence in Table 6 suggests that default adopters of tenure voting
do not engage in more long-term oriented investments and do not improve their performance
vis-a-vis other stakeholders. Rather, the evidence is consistent with those firms losing long-
term oriented investors that otherwise support such investments.
4.5 Additional Tests
One of the key features of tenure voting is that it makes unsolicited takeovers all the more
difficult. For example, prospective acquirers would not gain much voting sway from a toehold
position, as they would have to register their shares and wait two years to benefit from double
26

voting rights. We examine whether firms that adopt tenure voting by default adopt other
antitakeover provisions and whether they are less susceptible to hostile bids. In untabulated
tests, we find no difference in the number of antitakeover provisions for default adopters of
tenure voting relative to the control group after Florange. It is possible that tenure voting
per se be sufficient as a deterrent that firms would not adopt other (possibly unpopular)
measures. We also examine the incidence of hostile takeover attempts after Florange. With
only six unsolicited takeover attempts in France between 2014 and 2019, though, we cannot
37
draw any statistically meaningful inferences with respect to takeover susceptibility.
Tenure voting also potentially increases the costs of shareholder activism. Shareholder
activism remains primarily an Anglo-Saxon phenomenon (see Wang et al. (2020) for back-
ground information on CIAM, the only French activist fund) and is seen by critics as one of
the foremost symptoms of capital market myopia. Activists would likely find it difficult to
obtain sufficient voting support to gain access to the board or to pressure management into
making investment, financing, or governance changes. Using Capital IQ, we gather data on
instances of shareholder activism in France during our sample period. In untabulated tests,
we find 17 instances of ’confrontational’ and public engagement between shareholders and
firms, only one of which prior to Florange. 11 of the targets are early adopters of tenure
voting, and only two are default adopters, mirroring the distribution of firms across groups
in our sample. Again, anecdotally, this suggests that tenure voting does not necessarily stop
shareholder activism. However, the data on activism neither support nor contradict our
main results in terms of the overall efficacy of the Florange Act.
Circling back to our first test on foreign institutional ownership, one question remains
unanswered: Did investors re-allocate from default adopters to other French stocks, or did
they reduce their holdings in the French market? While this is a difficult question to address,
we devise a simple test to speak to it. Specifically, we examine changes in foreign institutional
37
Anecdotally, the 2014 ’battle’ between the Chinese conglomerate Fosun and Global Resorts—the invest-
ment vehicle of Italian private equity financier Andrea Bonomi—for the control of Club Mediterranée ended
in Fosun’s favor even though Global Resorts accumulated more shares because Fosun had been a strategic
partner of Club Mediterranée since 2010 and had thus obtained double voting rights.
27

ownership before and after Florange in rejecters and voluntary adopters of tenure voting.
Our intuition is that, if investors reallocate their funds within the French market, then the
growth rate of their holdings should increase after Florange. However, in untabulated tests,
we fail to find such pattern. We interpret this test as weak evidence that foreign investors
re-allocated their capital outside of France. This re-allocation suggests that Florange was
detrimental to the French capital market’s overall attractiveness.
5 Conclusion
In 2014, the French Congress passed the Florange Act, which mandates the granting of
double voting rights to holders of publicly-listed companies’ shares who have held shares for
at least two consecutive years, unless shareholders explicitly vote to opt out and maintain the
‘one share one vote’ principle. The law was ostensibly passed to promote greater long-term
orientation in public corporations’ decision making. Yet, critics argued that it was a move to
cement the French government’s stronghold on companies where it owned minority stakes,
and that it would otherwise favor entrenched French blockholders at the expense of minority
shareholders. Our main findings are threefold. First, we find that firms adopting double
voting rights by default (i.e., default adopters) experience a decrease in the percentage of their
shares held by foreign institutional investors—especially long-term oriented ones—relative
to those who rejected such governance change. The drop in foreign institutional ownership
is offset by an increase in insider/family ownership. Second, we find that default adopters
significantly underperform rejecters after Florange in terms of stock returns. Third, we find
no evidence that default adopters invest or innovate more. In contrast, their environmental
and social performance deteriorate. Collectively—and in light of the large literature that
shows how foreign institutional shareholders spur more long-term orientation and corporate
social responsibility—the results suggest that the law failed to achieve its stated objective,
and that it may have led to value destruction in firms that departed from the ‘one share one
28

vote’ principle by default.
Overall, our results cast doubt on the effectiveness of a regulatory approach to addressing
the (presumed) pervasiveness of myopia in public equity markets. However, it remains
possible that similar efforts could yield a different outcome outside of the French market,
depending on other capital market institutions, ownership diffusion, and political influence
among others.
29

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34

Figure 1: Foreign Institutional Ownership over 2010 - 2018
This figure shows the mean foreign institutional ownership per year for the groups of early adopters, default
adopters, and rejecters.The horizontal axis corresponds to years and the vertical axis to the level of foreign
institutional ownership (%).
35

Figure 2: French Insider Ownership by Group and Year
This figure shows the average insider ownership for our three groups (early adopters, rejecters, and default adopters) from 2010 to 2018. French
insider ownership is defined as the sum of individual and other insiders ownership. The horizontal axis corresponds to years and the vertical axis to
the level of French insider ownership (%].
36

Table 1: Summary Statistics
This table presents the summary statistics for our main variables. Variables are defined in Appendix B.
Variables #Obs. Mean S.D. 0.25 Mdn 0.75

Tenure-Based Voting 2,936 0.72 0.45 0.00 1.00 1.00
Foreign Institutional Ownership (%) 2,936 9.63 13.44 0.03 4.09 14.32
Size 2,936 19.65 2.29 17.99 19.44 21.31
Leverage 2,936 0.23 0.17 0.09 0.21 0.33
Market-to-Book 2,936 1.88 1.89 0.88 1.39 2.33
Dividend Dummy 2,936 0.67 0.47 0.00 1.00 1.00
Free Cash Flow 2,936 0.00 0.11 -0.01 0.02 0.05
Cash 2,936 0.15 0.16 0.06 0.11 0.18
Asset Tangibility 2,936 0.16 0.18 0.02 0.09 0.25
MSCI 2,936 0.15 0.36 0.00 0.00 0.00
Nb. Antitakeover Devices 719 1.57 1.28 1.00 1.00 2.00

Staggered Board 719 0.90 0.30 1.00 1.00 1.00
Super Majority 719 0.27 0.45 0.00 0.00 1.00
Limited Rights 719 0.15 0.36 0.00 0.00 0.00
Golden Parachute 719 0.26 0.44 0.00 0.00 1.00
Entrenchment Index 719 2.34 1.10 2.00 2.00 3.00
Shareholder Score 719 49.11 29.33 23.20 48.33 74.74
French Ownership (%) 2,936 52.12 29.14 26.78 58.06 73.49

French Government Ownership (%) 2,936 1.01 4.70 0.00 0.00 0.00
French Institutional Ownership (%) 2,936 6.05 7.58 0.65 3.71 8.26
French Individual & Insider Ownership (%) 2,936 33.32 31.71 0.00 27.80 59.47
Foreign High Turnover (%) 2,936 0.43 1.63 0.00 0.00 0.43
Foreign Low Turnover (%) 2,936 6.56 10.32 0.00 2.07 9.60
French High Turnover (%) 2,936 0.54 1.27 0.00 0.08 0.52
French Low Turnover (%) 2,936 3.29 5.74 0.01 1.02 3.93
Tobin’s Q 2,936 1.47 1.00 0.57 1.17 1.56

CAPEX 2,936 0.04 0.04 0.01 0.03 0.05
CAPEX + R&D 2,936 0.05 0.07 0.01 0.03 0.06
Social Score 719 65.16 22.26 48.56 69.01 83.41
Environmental Score 719 63.78 21.66 47.20 67.57 82.71
37

Table 2: Comparisons Across Groups in the Pre-Regulation Period
This table reports univariate comparisons between various groups. In Panel A, we tabulate the results of
sample mean difference tests between the group of early (i.e., voluntary) adopters and the group of firms
without double-voting rights pre Florange (rejecters and default adopters) across our main variables as of
the end of 2013. In Panel B, we tabulate the results of sample mean difference tests between the group of
rejecters and default adopters pre Florange across our main variables as of the end of 2013. In Panel C, we
present estimates of the association between tenure-based voting rights and other governance characteristics
in the pre-regulation period (2010-2013). Constants are omitted from the table for brevity. Standard errors
robust to heteroscedasticity are reported in parentheses below each point estimate. ***, **, and * indicate
statistical significance at the 1%, 5%, and 10% level, respectively, based on a two-tailed t-test. All variables
are defined in Appendix B.
Panel A: Comparison between early adopters and non-voluntary adopters
Non-Voluntary Early Difference P-value

Adopters Adopters
Size 19.82 19.45 0.36 0.19
Leverage 0.26 0.21 0.05 0.03
Market-to-Book 1.75 1.93 -0.18 0.44
Dividend Dummy 0.65 0.63 0.03 0.67
Free Cash Flow -0.02 0.00 -0.02 0.14
Cash 0.16 0.15 0.01 0.49
Asset Tangibility 0.13 0.17 -0.03 0.13
MSCI 0.18 0.15 0.04 0.41
Entrenchment Index 2.11 2.64 -0.53 0.02
Shareholder Score 67.32 37.46 29.86 0.00
Nb Antitakeover Devices 0.89 2.15 -1.26 0.00
Staggered Board 0.96 1.00 -0.04 0.19
Super Majority 0.22 0.23 -0.01 0.91
Limited Right 0.19 0.15 0.04 0.69
Golden Parachute 0.15 0.36 -0.21 0.05
Tobin’s Q 1.43 1.51 -0.08 0.51
CAPEX 0.04 0.04 -0.01 0.27
CAPEX + R&D 0.05 0.05 0.00 0.58
Social Score 58.92 61.14 -2.22 0.66
Environmental Score 66.18 63.97 2.21 0.66
Foreign Institutional Ownership 10.93 8.51 2.42 0.11
French Ownership 50.11 53.46 -3.35 0.33
French Institutional Ownership 6.66 5.84 0.83 0.41
French Individual & Insider Ownership 26.89 35.90 -9.01 0.02
French Government Ownership 2.14 0.84 1.31 0.03
Foreign Low Turnover 5.33 5.00 0.33 0.73
French Low Turnover 3.27 3.27 0.00 1.00
38

Panel B: Comparison between rejecters and default adopters
Rejecters Default Adopters Diff P-value

Size 19.71 20.17 -0.46 0.41
Leverage 0.27 0.21 0.07 0.17
Market-to-Book 1.80 1.60 0.19 0.67
Dividend Dummy 0.63 0.74 -0.11 0.33
Free Cash Flow -0.03 0.01 -0.04 0.13
Cash 0.17 0.14 0.03 0.61
Asset Tangibility 0.13 0.15 -0.03 0.61
MSCI 0.17 0.22 -0.04 0.64
Entrenchment Index 2.26 1.75 0.51 0.20
Shareholder Score 64.32 74.46 -10.15 0.38
Nb Antitakeover Devices 1.11 0.38 0.73 0.05
Staggered Board 1.00 0.88 0.13 0.13
Super Majority 0.11 0.50 -0.40 0.02
Limited Right 0.21 0.13 0.09 0.62
Golden Parachute 0.21 0.31 -0.10 0.42
Tobin’s Q 1.42 1.45 -0.04 0.87
CAPEX 0.04 0.03 0.01 0.32
CAPEX + R&D 0.05 0.03 0.02 0.26
Social Score 55.58 67.97 -12.39 0.16
Environmental Score 62.78 75.42 -12.64 0.19
Foreign Institutional Ownership 11.67 8.51 3.16 0.38
French Ownership 47.59 58.35 -10.76 0.16
French Institutional Ownership 6.84 6.09 0.74 0.76
French Individual & Insider Ownership 24.08 36.06 -11.98 0.14
French Government Ownership 1.11 5.51 -4.40 0.01
Foreign Low Turnover 5.66 4.25 1.41 0.46
French Low Turnover 3.28 3.22 0.06 0.97
39

Panel C: Tenure-Based Voting and Governance
(1) (2) (3) (4) (5) (6) (7)

Antitakeover Staggered Super Majority Limited right Golden Entrenchment Shareholder
Provisions Board Requirement to call meetings Parachute Index Score
Tenure-Based Voting 1.141*** 0.087** 0.019 0.004 0.226*** 0.706*** -28.517***

(0.117) (0.040) (0.052) (0.042) (0.050) (0.130) (3.167)
Size 0.111 0.068*** 0.047 0.024 0.049 0.177** 3.951**
(0.079) (0.021) (0.030) (0.025) (0.031) (0.078) (1.613)
Leverage -0.211 0.429*** -0.144 -0.095 0.292* 0.603 44.882***
(0.414) (0.107) (0.165) (0.122) (0.173) (0.427) (10.838)
Market-to-Book -0.005 0.002 -0.042*** -0.011 -0.041*** -0.090*** -2.501**
(0.036) (0.007) (0.010) (0.009) (0.013) (0.026) (1.063)
Dividend Dummy -0.485* -0.004 -0.218** -0.150* 0.018 -0.503* -2.367
(0.266) (0.062) (0.093) (0.082) (0.090) (0.287) (5.566)
40
Free Cash Flow -0.116 -0.223 1.881*** -0.580* -0.196 0.754 20.208
(1.225) (0.293) (0.487) (0.328) (0.502) (1.112) (25.944)
Cash -0.418 0.060 -0.651* 0.223 0.654* 0.440 83.914***
(1.079) (0.295) (0.332) (0.342) (0.383) (0.952) (20.739)
Asset Tangibility -0.141 -0.191 0.111 -0.212** -0.081 -0.387 1.873
(0.294) (0.123) (0.147) (0.102) (0.161) (0.308) (9.246)
MSCI 0.149 -0.091* 0.041 0.033 -0.093 0.013 -5.330
(0.177) (0.048) (0.062) (0.048) (0.075) (0.179) (4.180)

Observations 290 290 290 290 290 290 290
Year Fixed Effects Yes Yes Yes Yes Yes Yes
Adjusted R-Squared 0.244 0.174 0.068 0.014 0.059 0.135 0.297
Table 3: The Impact of the Florange Act on Ownership
This table presents estimates of the effect of the adoption of DVR as stipulated by the Florange Act on
ownership in French listed firms. Post is a dummy variable equal to 0 for 2010 to 2013 and 1 for 2015 to
2018. Default Adopters is a dummy variable equal to 1 if a firm adopts DVR as a consequence of the Florange
Act, and 0 otherwise. In Panel A, the dependent variable is foreign institutional ownership. In columns 1
and 2 of Panel A, the baseline control group consists of rejecters only. In columns 3 and 4 of Panel A, the
extended control group consists of both rejecters (firms rejecting the introduction of DVR as stipulated by the
Florange Act) and early adopters (firms already having DVR before the Florange Act). The specification
of column 2 is the one we replicate in Panel B and C. In Panel B, the dependent variables are French
institutional ownership, French individuals and insiders ownership, and French government ownership, in
columns 1, 2, and 3, respectively. In Panel C, the dependent variables are low-turnover foreign institutional
ownership, low-turnover french institutional ownership, low-turnover institutional ownership, high-turnover
foreign institutional ownership, high-turnover french institutional ownership,and high-turnover institutional
ownership, in columns 1, 2, 3, 4, 5, and 6, respectively. In Panel D, we split the foreign institutional ownership
into foreign institutional ownership of investors already present in the company as of end of 2014 (column 1)
and foreign institutional ownership of investors that joined the company after 2013 (column 2). Constants
are omitted from the table for brevity. See Appendix B for variable definitions. Standard errors robust to
heteroscedasticity are reported in parentheses below each point estimate. ***, **, and * indicate statistical
significance at the 1%, 5%, and 10% level, respectively, based on a two-tailed t-test.
Panel A: Baseline Result on Foreign Institutional Ownership
(1) (2) (3) (4)

Foreign Institutional Ownership Baseline Sample Baseline Sample Extended Sample Extended Sample
Post x Default Adopters -3.809*** -3.968*** -2.637*** -2.731***

(0.943) (0.973) (0.603) (0.601)
Size 2.200*** 1.447***
(0.573) (0.321)
Leverage 4.244 -3.004
(3.203) (1.961)
Market-to-Book -0.245 -0.071
(0.248) (0.140)
Dividend Dummy -2.910 -1.253*
(2.059) (0.669)
Free Cash Flow 0.188 1.669
(3.327) (2.704)
Cash 3.849* 2.362
(2.249) (1.569)
Asset Tangibility 5.004*** 7.024***
(1.928) (1.668)
MSCI -1.689 -1.187
(2.155) (0.933)
Observations 763 763 2,593 2,593

Year Fixed Effects Yes Yes Yes Yes
Firm Fixed Effects Yes Yes Yes Yes
Adjusted R-squared 0.742 0.745 0.782 0.786
41

Panel B: Other Groups of Shareholders
(1) (2) (3)
French Institutional French Individuals & French Republic
Ownership Insiders Ownership Ownership
Post x Default Adopters -0.292 4.309*** 0.815**

(0.856) (1.529) (0.405)
Controls Yes Yes Yes
Observations 763 763 763

Year Fixed Effects Yes Yes Yes
Firm Fixed Effects Yes Yes Yes
Adjusted R-squared 0.698 0.930 0.897
42
Panel C: Long-Term Institutional Investors
(1) (2) (3) (4) (5) (6)
Foreign French Total Foreign French Total
Low Turnover Low Turnover Low Turnover High Turnover High Turnover High Turnover
Post x Default Adopters -3.798*** -1.160 -4.959*** -0.169 0.869 0.700

(0.928) (0.777) (1.293) (0.676) (0.557) (0.862)

Controls Yes Yes Yes Yes Yes Yes
Observations 763 763 763 763 763 763

Year Fixed Effects Yes Yes Yes Yes Yes Yes
Firm Fixed Effects Yes Yes Yes Yes Yes Yes
Adjusted R-squared 0.565 0.563 0.562 0.367 0.449 0.445
Panel D: Existing versus New Foreign Long-term Institutional Investors
(1) (2)
Foreign Long-term Institutional Ownership Existing Investors New Investors
Post x Default Adopters -2.093*** -1.706**

(0.692) (0.682)
Controls Yes Yes
Observations 763 763

Year Fixed Effects Yes Yes
Firm Fixed Effects Yes Yes
Adjusted R-squared 0.573 0.260
43

Table 4: Dynamics and Testing for Bias - Main Effect
This table presents. In Panel A, we replicate Table 3, Panel A, Column 4 but replace Post x Default Adopters by interactions of years and the
treatment group. In Panel B, we report the delta* of Oster (2017) for the specification reported in Table 3, Panel A, Column 2. Constants are omitted
from the table for brevity. See Appendix B for variable definitions. Standard errors robust to heteroscedasticity are reported in parentheses below
each point estimate. ***, **, and * indicate statistical significance at the 1%, 5%, and 10% level, respectively, based on a two-tailed t-test.
Panel A: Dynamics
(1) (2)
Foreign Institutional Ownership Baseline Sample Extended Sample
Pre 2011 x Defaults Adopters -1.042 -1.236

(2.361) (1.354)
(2.314) (1.381)
(2.283) (1.368)
Post 2015 x Defaults Adopters -6.085*** -3.794***
(2.200) (1.262)
44
Post 2016 x Defaults Adopters -6.434*** -4.007***
(2.317) (1.315)
Post 2017 x Defaults Adopters -5.061** -3.695***
(2.375) (1.345)
Post 2018 x Defaults Adopters -4.692* -3.888**
(2.476) (1.577)
Observations 763 2,593

Controls Yes Yes
Year Fixed Effects Yes Yes
Firm Fixed Effects Yes Yes

Adjusted R-squared 0.744 0.785
Panel B: Testing for Bias
δ*
Rmax= 1
Post x Default Adopters 4.68

Table 5: Portfolio Strategies
This table presents the results of regressions of the returns of long-short portfolios exploiting the introduction
of DVR as stipulated by the Florange Act on a five-factor market model (Fama-French three factors +
momentum and liquidity factors). In Panel A, the portfolio, as of beginning of April 2014, is long on firms
that will reject the introduction of DVR following the Florange Act and short on the ones that will not
reject them. In Panel B, the portfolio starts shorting default adopters as of beginning of April 2014, and
take long positions on rejecters as soon as the outcome of the resolution vote on DVR is known. In Panel
C, the portfolio takes a long (short) position on firms that will reject (adopt) DVR as stipulated by the
Florange Act but between January 2011 and March 2014. See Appendix B for variable definitions. We use
Newey–West standard errors with a maximum lag order of autocorrelation of 3. T-statistics are reported in
parentheses below each point estimate. ***, **, and * indicate statistical significance at the 1%, 5%, and
10% level, respectively, based on a two-tailed t-test.
Panel A: Strategy A
Portfolio Return (%) (1) (2) (3) (4) (5) (6)

Equally Weighted Value Weighted
Until 2016 Until 2017 Until 2018 Until 2016 Until 2017 Until 2018
Constant 0.53** 0.47** 0.51** 0.50** 0.46** 0.48**

(2.50) (2.60) (2.59) (2.41) (2.59) (2.58)
MKTR 0.48*** 0.43*** 0.40*** 0.46*** 0.42*** 0.39***
(10.02) (7.17) (6.47) (9.97) (7.54) (6.93)
SMB 0.35*** 0.24*** 0.11 0.31*** 0.21*** 0.09
(5.75) (3.07) (1.37) (5.12) (2.74) (1.17)
HML -0.09 -0.00 0.08 -0.08 -0.01 0.07
(-1.20) (-0.03) (0.96) (-1.05) (-0.08) (0.84)
MOM 0.13** 0.09 0.02 0.13* 0.08 0.03
(2.13) (1.40) (0.23) (2.05) (1.33) (0.37)
LIQ 0.10 0.11 0.11 0.10 0.11 0.11*
(1.11) (1.35) (1.60) (1.09) (1.40) (1.72)
Number of months 33 45 57 33 45 57
Panel B: Strategy B
Portfolio Return (%) (1) (2) (3) (4) (5) (6)

Until 2016 Until 2017 Until 2018 Until 2016 Until 2017 Until 2018
Constant 0.67 0.64* 0.63** 0.60 0.59* 0.58**

(1.62) (1.81) (2.22) (1.50) (1.75) (2.14)
MKTR 0.33* 0.31** 0.31*** 0.31* 0.29** 0.30***
(1.84) (2.11) (3.12) (1.76) (2.09) (3.15)
SMB 0.46** 0.35* 0.25 0.42* 0.32* 0.23
(2.14) (1.92) (1.61) (1.92) (1.75) (1.47)
HML 0.09 0.12 0.20 0.10 0.12 0.19
(0.50) (0.75) (1.44) (0.56) (0.76) (1.39)
MOM 0.07 0.06 0.00 0.08 0.07 0.02
(0.41) (0.42) (0.03) (0.49) (0.49) (0.20)
LIQ -0.07 -0.04 -0.02 -0.06 -0.04 -0.02
(-0.41) (-0.29) (-0.15) (-0.36) (-0.31) (-0.14)
Number of months 33 45 57 33 45 57
45

Panel C: Placebo Strategy
Portfolio Return (%) (1) (2) (3) (4)
2012-2014 2011-2014 2012-2014 2011-2014
Constant 0.25 -0.19 0.21 -0.21

(0.96) (-0.65) (0.88) (-0.77)
MKTR 0.38*** 0.43*** 0.39*** 0.43***
(4.64) (5.31) (4.61) (5.48)
SMB 0.11 0.09 0.13 0.10
(0.89) (0.58) (1.01) (0.66)
HML 0.09 0.04 0.08 0.03
(0.75) (0.29) (0.63) (0.26)
MOM -0.09 -0.11 -0.08 -0.10
(-1.02) (-1.15) (-0.99) (-1.11)
LIQ 0.18 0.28* 0.15 0.25*
(1.46) (2.03) (1.20) (1.94)
Number of months 27 39 27 39
46

Table 6: Consequences
firm investment and performance (Panel A), environmental performance (Panel B), and social performance
(Panel C). It replicates the specification of Table 3, Panel A, Column 4. In panel A, the dependent variables
are R&D scaled by total assets, CAPEX scaled by total assets, RD plus CAPEX scaled by total assets,
Tobin’s Q, and the natural logarithm of Tobin’s Q in columns 1, 2, 3, 4, and 5, respectively. In Panel B,
the dependent variables are the Asset 4’s environmental score, and the scores across its three main pillars
(Resource Use, Emissions, and Green Innovation). In Panel C, the dependent variables are the Asset 4’s
social score, and the scores across its four main pillars (Product Responsibility, Workforce, Human Rights,
and Community). Constants are omitted from the table for brevity. See Appendix B for variable definitions.
Standard errors robust to heteroscedasticity in parentheses below each point estimate. ***, **, and * indicate
statistical significance at the 1%, 5%, and 10% level, respectively, based on a two-tailed t-test.
Panel A: Firm investment and performance
(1) (2) (3) (4)

(5)
CAPEX R&D + CAPEX Tobins Q Log(Tobins Q)
Post x Default Adopters -0.003 0.001 -0.283*** -0.126***
(0.002) (0.003) (0.067) (0.027)
Size 0.002 0.007*** 0.420*** 0.213***
(0.003) (0.002) (0.051) (0.019)
Leverage -0.025*** -0.012 0.007 0.095
(0.008) (0.011) (0.217) (0.104)
Market-to-Book -0.001 -0.002**
(0.002) (0.001)
Dividend Dummy 0.001 -0.005 -0.315*** -0.152***
(0.003) (0.005) (0.063) (0.029)
Free Cash Flow -0.088*** -0.100*** -1.801*** -0.769***
(0.034) (0.020) (0.438) (0.167)
Cash -0.016 -0.013 1.799*** 0.982***
(0.019) (0.008) (0.280) (0.126)
Asset Tangibility 0.007 0.013** 0.137 0.150*
(0.008) (0.006) (0.140) (0.087)
MSCI 0.000 -0.001 -0.137** -0.033
(0.003) (0.004) (0.063) (0.035)
R&D Missing Dummy 0.227 0.089
(0.224) (0.091)
R&D -3.724* -1.398
(2.231) (0.951)
Observations 763 763 763 763

47

Panel B: Environmental Performance
(1) (2) (3) (4)

Environmental Resource Use Emission Green Innovation
Score Score Score
Post x Default Adopters -6.268*** -7.101*** -6.016** -8.703**

(1.985) (2.278) (2.644) (3.904)
Size -3.406* -1.715 -0.562 -11.733***
(2.055) (2.291) (2.698) (3.880)
Leverage 17.408 9.340 13.193 27.039
(11.017) (12.447) (12.298) (28.407)
Market-to-Book -0.209 -0.727 -0.554 2.089
(0.648) (0.952) (0.741) (1.390)
Dividend Dummy 4.394* 6.376* 1.559 2.910
(2.333) (3.344) (3.160) (6.722)
Free Cash Flow -45.524** -37.210 -72.222** 110.914
(22.298) (44.400) (28.868) (86.525)
Cash 11.915 -14.603 10.610 47.310*
(13.182) (18.788) (18.129) (24.252)
Asset Tangibility -3.878 -1.019 10.380 -22.140
(15.297) (19.031) (19.564) (36.258)
MSCI -0.522 1.884 0.397 0.347
(2.110) (2.450) (3.059) (3.596)
Observations 221 221 221 221

48

Panel C: Social Performance
(1) (2) (3) (4) (5)

Social Product Workforce Human Rights Community
Score Responsibility
Post x Default Adopters -7.642*** -2.358 -6.449*** -2.984 -21.866***

(2.570) (5.082) (1.958) (5.641) (6.239)
Size 2.382 -1.910 -3.071 2.961 8.397*
(2.910) (5.397) (2.282) (5.612) (4.616)
Leverage -6.515 -75.580** -6.610 69.556*** 18.448
(14.359) (32.003) (9.280) (26.033) (26.769)
Market-to-Book -1.006 -2.442 -1.081 -0.471 0.198
(0.972) (1.957) (0.918) (1.346) (1.351)
Dividend Dummy -2.857 -5.899 4.561** 9.933 -16.833**
(4.200) (5.276) (2.183) (7.415) (7.071)
Free Cash Flow 54.512* 69.090* -4.605 -4.807 155.035**
(30.830) (40.910) (20.851) (75.233) (67.753)
Cash -1.777 8.225 6.664 8.347 -10.245
(18.335) (45.115) (14.072) (31.820) (30.828)
Asset Tangibility -18.226 29.371 4.882 -48.970 -94.950**
(19.308) (38.555) (14.438) (41.062) (42.550)
MSCI 3.187 7.896 -3.471 9.914 -4.782
(3.274) (7.555) (2.601) (7.021) (4.425)
Observations 221 221 221 221 221

Year Fixed Effects Yes Yes Yes Yes Yes
Firm Fixed Effects Yes Yes Yes Yes Yes
Adjusted R-squared 0.809 0.699 0.758 0.679 0.711
49

Appendix A: Sample Construction
This table presents the different stages of our sample constructions, indicating how many unique firms we lost at each stage as a consequence of the
restrictions we introduce.
Restrictions #Unique Firms
50
Whole Thomson Reuter Refinitiv universe of French stocks over 2010 – 2020 listed on Euronext – Paris. 1,323
Headquartered in France. 1,246
Listed on Euronext PARIS (Segment A, B, C). 635
Drop Utilities and Financials. 559
Ownership, financial, and accounting data available for 2014. Listed as of beginning of 2014. 385
Relevant data on double-voting rights from bylaws in annual reports. Date of resolution vote for rejecters. 343

Appendix B: Variable Definitions
Variables Definitions Sources

Early Adopters Companies with double-voting rights in their bylaws before the Florange Act. Hand collected
Default Adopters Companies not rejecting the introduction of double-voting rights as stipulated by the Florange Act Hand collected
Rejecters Companies rejecting the introduction of double-voting rights as stipulated by the Florange Act. Hand collected
Tenure-Based Voting Dummy variable coding for whether a company has double voting rights in its bylaws. Hand collected
Asset Tangibility Net property, plants, and equipment scaled by total assets. Refinitiv
CAPEX Capital expenditures scaled by total assets. Refinitiv
CAPEX + R&D Capital expenditures plus R&D expenses scaled by total assets. Missing R&D values are set to zero. Refinitiv
Cash Cash and short-term investments scaled by total assets. Refinitiv
Dividend Dummy Indicator variable equal to one if a company pays dividend in a given year, and zero otherwise. Refinitiv
EINDEX Entrenchment Index computed following Bebchuk et al. (2009). Refinitiv
Environmental Score Environmental Score aggregates the following scores: Resource Use Score, Emission Reduction Score, Refinitiv
and Green Innovation Score.
Foreign High Turnover Percentage of foreign institutional investors with high portfolio turnover. Refinitiv
High turnover occurs if the annual portfolio turnover rate is great than 100%.
51
Foreign Low Turnover Percentage of foreign institutional investors with low portfolio turnover Refinitiv
Low turnover occurs if the annual portfolio turnover rate is less than 50%.
Foreign Institutional Ownership Percentage of foreign institutional ownership. We exclude foreign investors whose investor type is Refinitiv
“Individual Investor”, “Corporation”, “Holding Company”, and “Other Inside”.
Free Cash Flow Net income before extraordinary items minus capital expenditures plus depreciation, scaled by total assets. Refinitiv
French Government Ownership Direct and indirect ownership of the French Republic. Refinitiv
French High Turnover Percentage of French institutional investors with high portfolio turnover. Refinitiv
High turnover occurs if the annual portfolio turnover rate is great than 100%.
French Low Turnover Percentage of French institutional investors with low portfolio turnover. Refinitiv
Low turnover occurs if the annual portfolio turnover rate is less than 50%.
French Individuals & Insiders Ownership of French investors with type equal to “Individual Investors” & “Other Insiders”. Refinitiv

French Institutional Investors Percentage of French institutional ownership. We exclude French investors whose investor type are Refinitiv
“Individual Investor”, “Corporation”, “Holding Company”, “Other Insider”, and “Government Ownership”.
Golden Parachutes Indicator variable equal to one if the firm has golden parachutes in place, and zero otherwise. Refinitiv
HML We follow the procedure from Fama and French (1993) to compute the High Minus Low factor. Refinitiv
We consider stocks belonging to the segments A, B, and C of Euronext.
Leverage Total debt scaled by total assets. Refinitiv
Limited Rights Indicator variable equal to one if there is a limited right to call meetings, and zero otherwise. Refinitiv
LIQ Liquidity premium calculated as the return of portfolio long on illiquid stocks and short on liquid stocks,
controlling for size and value factors, whereby a stock’s liquidity is measures following Amihud (2002).
Market-to-Book Market value of equity divided by the book value of equity. Refinitiv
Appendix B: Variable Definitions (continued)
Variables Definitions Sources

MKTR Monthly value-weighted excess return of a portfolio consisting of all the French stocks market.
MOM We follow the procedure in Carhart (1997) to calculate momentum. Refinitiv
MSCI Dummy variable coding for whether a stock is included in the MSCI All Country Index MSCI
Nb. Antitakeover Devices Number of anti-takeover devices in place. Refinitiv
Poison Pills Indicator variables equal to 1 if the number of antitakeover devices is greater than zero, and 0 otherwise. Refinitiv
R&D R&D expenses scaled by total assets. Missing R&D values are set to zero. Refinitiv
R&D Missing Dummy Dummy variable that codes for whether R&D expenses are missing. Refinitiv
Shareholder Score A company’s effectiveness towards equal treatment of shareholders and the use of anti-takeover devices from Asset 4. Refinitiv
Size Natural logarithm of the market capitalization. Refinitiv
SMB We follow the procedure from Fama and French (1993) to compute the Small Minus Big factor. Refinitiv
Social Score Social Score aggregates the following scores: Workforce Score, Human Rights Score, Community Score, Refinitiv
and Product Responsibility Score.
Staggered Board Dummy variables coding for whether the board is staggered. Refinitiv
52
Super Majority Dummy variables coding for whether there is a supermajority requirement. Refinitiv
Tobin’s Q A company’s market value plus total assets minus total equity, scaled by total assets. Refinitiv

Online Appendix - Not Intended for Publication
• Online Appendix Figure 1: Stability of the Coefficient
In Online Appendix Figure 1, we account for the risk of outliers potentially driving our
results given our small sample of default adopters. We report the estimate of our baseline
effect on the impact of regulatory-induced tenure voting on foreign institutional ownership
by removing each default adopters from the sample one by one. Specifically, we estimate
the same specification as in column 2 of Table 3 Panel A. As reported in the figure, both
the magnitude (point estimate) and the precision (standard errors) of our estimates are
remarkably stable.
• Online Appendix Table 1: List of our Sample Firms’ Identifers
• Online Appendix Table 2: List of Default Adopters and Rejecters
This table lists firms in our sample that are subject to Florange and either adopted tenure
voting by default or rejected it by the end of March 31, 2016, which was the legal deadline
for firms to decide whether to reject or not.
• Online Appendix Table 3: Information on Investors
In Online Appendix Table 3, we provide more detailed information about investors from
our sample, which we briefly discuss now. In Panel A, we list the 20th largest foreign
investors as of end 2013, in terms of percentage held in the French stock market. The
type and country of origin is retrieved from Thomson Reuters Refinitiv. The list primarily
consists of long-term US institutional investors such as BlackRock, Vanguard, Fidelity, and
the Public Pension fund of Norway mentioned in the introduction and that are known to
be long-term oriented. Using a methodology derived from Derrien et al. (2013), we classify
more than half of these largest foreign investors as having a low portfolio turnover, a proxy
for their long-term orientation. This suggests that they have long holding periods and thus
are well suited to analyze whether they react positively to the government-induced adoption
of double voting rights (that supposedly empowers long-term investors) in some French listed
firms. In Panel B, we repeat this exercise and list the 20th largest French investors as of end
2013. For French investors, the predominance of insider and family ownership, as well as
strategic ownership by corporations and by the French government, is very visible. Again,
most of them exhibit are characterized by a low portfolio turnover. In Panel C, we list
the distribution of investors per country of origin for the largest 30th foreign countries as
of end 2013. The dominant groups are US, UK, Switzerland, Germany, Spain, Canada,
53

Luxembourg investors, which represent 25.22%, 11.49%, 9.66%, 9.59%, 5.16%, 4.39%, and
4.25% of the unique foreign institutional investors, respectively. In Panel D and Panel E, we
present the distribution of investors’ type for foreign and French investors as per Thomson
Reuters Refinitiv’s classification, respectively. For foreign investors, the dominant type is
Investment Advisor, i.e., individuals or groups that advise on investment strategies and
execute transactions on behalf of clients. This contrasts with the distribution we observe for
French investors, where the dominant types are Individual Investor, Corporation, and then
Other Insider Investor (typically family holdings).
• Online Appendix Table 4: Robustness to Sample Construction Criteria
In our sample construction (see Section 3.1), we require that firms in our sample have to
be listed in Euronext Paris exchange (segments A, B, or C) in 2014 before the enactment of
the Florange regulation. In this table, we further strengthen our sample construction criteria.
In columns 1 and 2, we impose that all firms in our sample must be listed continuously from
2012 to 2016, two years around the Florange regulation. This reduces our groups of early
adopters, rejecters, and default adopters by 30 firms, 8 firms, and 2 firms, respectively. In
columns 3 and 4, we impose that all firms in our sample must be listed continuously from
2010 to 2018, four years around the Florange regulation. This reduces our groups of early
adopters, rejecters, and default adopters by 51 firms, 17 firms, and 4 firms, respectively.
Our results is robust (negative and statistically significant at the 1% level) across all four
reported specifications, using both our baseline and extended control groups. Hence our
results from Panel A of Table 3 are not driven by firms that enter and/or exit the sample
during our sample period.
54

Online Appendix Figure 1: Stability of the Coefficient
This figure shows the estimate of our baseline effect on the impact of regulatory-induced tenure voting on
foreign institutional ownership by removing each default adopters from the sample one by one. Specifically,
we estimate the same specification as in column 2 of Table 3, Panel A. We report point estimate as well as
standard errors using a 95% confidence interval.
55

Online Appendix Table 1: List of our Sample Firms’ Identifers (RIC)
This table presents the list of the Thomson Refinitiv identifiers (RIC) for our sample firms.
FODL.PA GDMR.PA DOMS.PA MBWS.PA LECS.PA SFTC.PA MWDP.PA PUBP.PA HEXAO.PA PARF.PA IDLA.PA KAZI.PA
GALIM.PA ESIC.PA XPO.PA TIVO.PA VDNT.PA MRSP.PA EXHO.PA DAST.PA GNFT.PA SESL.PA STEN.PA DAMA.PA
IGXA.PA LBIRD.PA AKW.PA BOIR.PA SCLR.PA DTNC.PA MICP.PA CRIP.PA LZTL.PA VMX.PA DALE.PA LOUP.PA
AIRF.PA PASS.PA GEAP.PA BULY.PA BLIM.PA ASTP.PA TCFP.PA ERMT.PA LNA.PA MEMS.PA PATC.PA SOIT.PA
VIRB.PA LOEX.PA ADVI.PA GPIF.PA AVOM.PA ARTO.PA PRTP.PA RENA.PA SELER.PA OFP.PA AXW.PA PLVP.PA
VCTP.PA HFCO.PA FAIP.PA AUCP.PA IFDE.PA MIPO.PA PEUP.PA ORAN.PA METEX.PA LEGD.PA MPNG.PA RUBF.PA
LAEP.PA MANP.PA MMTP.PA FCMC.PA TIPK.PA JCDX.PA CMIP.PA ARCH.PA VETO.PA CGR.PA ADOC.PA BIOX.PA
MATP.PA SPBS.PA CDAF.PA BLEE.PA LACP.PA SDTC.PA COLP.PA ORP.PA TKTT.PA AKE.PA EOSI.PA DLTA.PA
GRBT.PA EEPC.PA DBG.PA EPMF.PA GLTN.PA GLFT.PA ESLX.PA KOF.PA EXEP.PA IPH.PA FPN.PA TFF.PA
SDGI.PA ROBF.PA CNIM.PA GOEG.PA VDLO.PA CCAP.PA SONO.PA SMTPC.PA TESI.PA ADP.PA SQLI.PA THHG.PA
TETR.PA CCHE.PA CGDM.PA BBUI.PA GTCN.PA ULRC.PA SEBF.PA BASS.PA TRNG.PA INEA.PA SEQ.PA WAVE.PA
IMAF.PA AREIT.PA PCAS.PA VRKP.PA PYHE.PA AIRP.PA AVMD.PA IPAR.PA TRIA.PA PRSW.PA EKI.PA AMOS.PA
56
FINA.PA AUER.PA SPOE.PA ALDP.PA ETOF.PA SAVEN.PA FROB.PA ITFT.PA BVI.PA KORI.PA ERYP.PA AVQ.PA
FLYP.PA TGEL.PA DPTP.PA AUBT.PA LTEN.PA CARR.PA HAVA.PA KEYR.PA CBSM.PA DBV.PA MAGIS.PA
JCQ.PA BOLL.PA CBQP.PA BOND.PA EGID.PA TOTF.PA LOIM.PA COHE.PA LPER.PA OLG.PA FNAC.PA
FDPA.PA CBLP.PA HIGH.PA CDBP.PA LBEL.PA OREP.PA SCHN.PA XIL.PA SIGF.PA RXL.PA SFRGR.PA
ALTT.PA LFVE.PA CIBP.PA CRPP.PA SDIF.PA VLLP.PA PLOF.PA ILD.PA GFCP.PA ATAR.PA FGA.PA
GAUM.PA NEXS.PA UBIP.PA PPCF.PA OSI.PA RXPA.PA CEGI.PA TOCO.PA C4X.PA ARGAN.PA GTT.PA
ICAD.PA AFON.PA EURR.PA STF.PA YAS.PA ACCP.PA SGOB.PA GFIP.PA ECASA.PA ECP.PA DMSP.PA
LINP.PA ROBFi.PA NATU.PA INN.PA PVAC.PA BOUY.PA CAPP.PA PARRO.PA NEXI.PA GENX.PA PARP.PA
CHBE.PA RADP.PA TFFP.PA FATL.PA SAF.PA LAFP.PA CNLP.PA OFMN.PA CAFO.PA GETP.PA ADUX.PA
LAFU.PA GFII.PA SAMS.PA TONN.PA ISOS.PA QDT.PA SGEF.PA NRO.PA CATGR.PA EDLP.PA JBOG.PA
BATD.PA CROS.PA SABL.PA MED6.PA DVTM.PA SASY.PA CASP.PA OPEN.PA CBOT.PA ABS.PA PHAI.PA
EEMA.PA SOPR.PA MRM.PA CTRG.PA ITS.PA DANO.PA ZODC.PA PROAC.PA QTE.PA FREY.PA LOCAL.PA
TAM.PA MAUP.PA COVH.PA CVO.PA BGBN.PA ESSF.PA VIV.PA VLS.PA GPEP.PA OREGE.PA CAPLI.PA

CITT.PA ATOS.PA PSBP.PA CFMP.PA IISP.PA PERP.PA ALUA.PA GFLO.PA ALSO.PA MKEA.PA NCOX.PA
TEIF.PA TEPRF.PA GENC.PA ITXA.PA ASY.PA IMTP.PA LAGA.PA ESIG.PA ETL.PA SEVI.PA STDM.PA
MNTP.PA HRMS.PA GIRO.PA DPAP.PA UTIN.PA BICP.PA RCOP.PA ETGM.PA NXTV.PA CARM.PA VLOF.PA
CFI.PA VILM.PA FINM.PA HOP.PA PRC.PA LVMH.PA DIOR.PA SFPI.PA MERY.PA EDEN.PA GEPH.PA
MUSE.PA SABT.PA PREP.PA CRTS.PA ORPF.PA EPED.PA FOUG.PA LDSV.PA IPN.PA TCH.PA AURS.PA
Online Appendix Table 2: List of Default Adopters and Rejecters
Company Name Group Company Name Group

Aeroports de Paris Default Adopters Eutelsat Communications Rejecters
Air France KLM Default Adopters Fonciere De Paris SIICS Rejecters
Akwel Default Adopters Immobiliere Dassault Rejecters
Alstom Default Adopters Societe Fonciere Lyonnaise Rejecters
Archos Default Adopters Fnac Darty Rejecters
Societe Ind. et Fin. de l’Artois Default Adopters FDL Rejecters
Augros Cosmetic Packaging Default Adopters Fonciere Paris Nord Rejecters
Bollore SE Default Adopters Frey Rejecters
Mersen Default Adopters Galimmo SCA Rejecters
Compagnie du Cambodge Default Adopters Gecina Rejecters
Cibox Inter@ctive Default Adopters GFI Informatique Rejecters
Financiere de l’Odet Default Adopters Gaztransport et Technigaz Rejecters
Euro Ressources Default Adopters Hexaom Rejecters
Havas Default Adopters Icade Rejecters
Le Belier Default Adopters Cie Industrielle Fin. Entr. Rejecters
La Fonciere Verte Default Adopters Altarea SCA Rejecters
Orange Default Adopters Innate Pharma Rejecters
Renault Default Adopters JCDecaux Rejecters
Sodifrance Default Adopters Korian Rejecters
Groupe SFPI Default Adopters Lafuma Rejecters
Sopra Steria Group Default Adopters Lectra Rejecters
Stentys Default Adopters Finatis Rejecters
Thermocompact Default Adopters Fonciere Euris Rejecters
Vivendi Default Adopters Klepierre Rejecters
Air Liquide Rejecters Manitou BF Rejecters
Altareit SCA Rejecters Mercialys Rejecters
Argan Rejecters Metropole Television Rejecters
Atos SE Rejecters Nicox Rejecters
Claranova Rejecters Nexity Rejecters
Bleecker Rejecters Nexans Rejecters
Fonciere 7 Investissement Rejecters Officiis Properties Rejecters
Onxeo Rejecters L’Oreal Rejecters
Capgemini SE Rejecters Groupe Partouche Rejecters
Cbo Territoria Rejecters Parrot Rejecters
Soc Centrale Bois Scieries Manche Rejecters Pharmagest Interactive Rejecters
Compagnie des Alpes Rejecters Proactis Rejecters
Baccarat Rejecters Quadient Rejecters
CFI-Compagnie Fonciere Internationale Rejecters Rubis SCA Rejecters
Acanthe Developpement SE Rejecters Rexel Rejecters
CeGeREAL Rejecters Selectirente Rejecters
Covivio Hotels SCA Rejecters Ses Imagotag Rejecters
Carpinienne de Participations Rejecters Suez Rejecters
Covivio Rejecters Vinci Rejecters
DBV Technologies Rejecters Societe Marseillaise Prado Carenage Rejecters
Les Docks des Petroles d Ambes Rejecters Technicolor Rejecters
Europacorp Rejecters Societe de la Tour Eiffel Rejecters
Euro Disney SCA Rejecters Tonnellerie Francois Freres Rejecters
Ekinops Rejecters Television Francaise 1 Rejecters
EOS Imaging Rejecters Tipiak Rejecters
Eurosic Rejecters Verimatrix Rejecters
Esso Societe Anonyme Francaise Rejecters
57

Online Appendix Table 3: Information on Investors
This table presents various information on investors in our sample. Panel A (Panel B) lists the 20th largest foreign (French) investors as of end 2013,
in terms of percentage held in the French stock market. The type and country of origin are retrieved from Thomson Reuters Refinitiv. The turnover
classification, discussed in Section 3 follows the methodology in Derrien et al. (2013). Panel C lists the distribution of investors per country of origin
for the largest 30th foreign countries as of end 2013. Panel D (Panel E) presents the distribution of investors’ type for foreign (French) investors as
per Thomson Reuters Refinitiv.
Panel A: Top-20 Foreign Institutional Investors
Name Type Country Turnover % Exchange Held

BlackRock Institutional Trust Company, N.A. Investment Advisor United States LOW 1.49
The Vanguard Group, Inc. Investment Advisor/Hedge Fund United States LOW 1.45
Norges Bank Investment Management (NBIM) Sovereign Wealth Fund Norway LOW 1.21
Capital Research Global Investors Investment Advisor United States LOW 1.00
58
MFS Investment Management Investment Advisor/Hedge Fund United States LOW 0.80
Capital World Investors Investment Advisor United States LOW 0.58
BlackRock Investment Management (UK) Ltd. Investment Advisor/Hedge Fund United Kingdom MED 0.53
Allianz Global Investors GmbH Investment Advisor Germany MED 0.52
JPMorgan Asset Management U.K. Limited Investment Advisor/Hedge Fund United Kingdom MED 0.48
Fidelity Management & Research Company Investment Advisor United States LOW 0.42
OppenheimerFunds, Inc. NLE Investment Advisor United States MED 0.39
BlackRock Advisors (UK) Limited Investment Advisor/Hedge Fund United Kingdom MED 0.36
MFS International (U.K.) Limited Investment Advisor United Kingdom HIGH 0.27
Nuveen LLC Pension Fund United States LOW 0.26
Schroder Investment Management Ltd. (SIM) Investment Advisor/Hedge Fund United Kingdom MED 0.25

Wellington Management Company, LLP Investment Advisor/Hedge Fund United States LOW 0.25
Fidelity International Investment Advisor United Kingdom MED 0.25
Dodge & Cox Investment Advisor/Hedge Fund United States LOW 0.25
BlackRock Asset Management Deutschland AG Investment Advisor Germany LOW 0.24
Dimensional Fund Advisors, L.P. Investment Advisor/Hedge Fund United States LOW 0.23
Panel B: Top-20 French Investors
Name Type Country Turnover % Exchange Held

Arnault Family Other Insider Investor France LOW 7.19
Government of France Government Agency France LOW 3.14
Bettencourt Meyers Family Other Insider Investor France LOW 2.09
Hermes Family Other Insider Investor France LOW 2.00
SAS Rue La Boétie Holding Company France LOW 1.32
Pinault Family Other Insider Investor France LOW 1.20
Amundi Asset Management Investment Advisor/Hedge Fund France MED 1.07
Dassault Family Other Insider Investor France LOW 0.98
59
Bolloré (Vincent) Individual Investor France LOW 0.90
THEAM Investment Advisor France HIGH 0.83
Drahi (Patrick) Individual Investor France LOW 0.81
Lyxor Asset Management Investment Advisor/Hedge Fund France LOW 0.78
Groupe BPCE Corporation France LOW 0.55
Total Employees Corporation France LOW 0.43
BNP Paribas Asset Management France SAS Investment Advisor/Hedge Fund France HIGH 0.42
L’Oreal SA Corporation France LOW 0.41
Bpifrance Participations S.A. Sovereign Wealth Fund France MED 0.36
Bolloré Family Other Insider Investor France LOW 0.32
Ostrum Asset Management Investment Advisor France MED 0.31

Caisse des Dépôts et Consignations Corporation France LOW 0.30
Panel C: Distribution of Foreign Institutional Investors by Country
Country Freq. Percent Country Freq. Percent

United States 689 25.22 Hong Kong 33 1.21
United Kingdom 314 11.49 Singapore 33 1.21
Switzerland 264 9.66 South Korea 32 1.17
Germany 262 9.59 Denmark 31 1.13
Spain 141 5.16 Poland 30 1.1
Canada 120 4.39 Belgium 28 1.02
Luxembourg 116 4.25 Taiwan 28 1.02
Italy 70 2.56 Ireland 25 0.92
Sweden 58 2.12 Finland 22 0.81
Austria 53 1.94 Portugal 22 0.81
South Africa 47 1.72 Norway 20 0.73
Japan 43 1.57 China (Mainland) 16 0.59
Australia 42 1.54 Brazil 15 0.55
Liechtenstein 39 1.43 Greece 12 0.44
Netherlands 39 1.43 Malaysia 11 0.4
Panel D: Distribution of Foreign Institutional Investors by Investor Type
Investor Type Description Freq. Percent

Investment Advisor 1,762 64.49
Investment Advisor/Hedge Fund 612 22.40
Bank and Trust 162 5.93
Hedge Fund 82 3.00
Pension Fund 36 1.32
Private Equity 23 0.84
Insurance Company 18 0.66
Venture Capital 12 0.44
Sovereign Wealth Fund 11 0.40
Government Agency 8 0.29
Foundation 2 0.07
Research Firm 2 0.07
Endowment Fund 1 0.04
Independent Research Firm 1 0.04
60

Panel E: Distribution of French Investors by Investor Type
Investor Type Description Freq. Percent
Individual Investor 664 41.32
Corporation 427 26.57
Investment Advisor 207 12.88
Other Insider Investor 196 12.20
Private Equity 32 1.99
Investment Advisor/Hedge Fund 19 1.18
Venture Capital 18 1.12
Holding Company 16 1.00
Insurance Company 13 0.81
Bank and Trust 5 0.31
Hedge Fund 4 0.25
Government Agency 2 0.12
Research Firm 2 0.12
Independent Research Firm 1 0.06
Sovereign Wealth Fund 1 0.06
Online Appendix Table 4: Robustness to Sample Construction Criteria

foreign institutional ownership in French listed firms. Post is a dummy variable equal to 0 for 2010 to
2013 and 1 for 2015 to 2018. Default Adopters is a dummy variable equal to 1 if a firm adopts DVR as a
consequence of the Florange Act, and 0 otherwise. In columns 1 and 2, we require firms in our sample to be
listed continuously between 2012 and 2016. In columns 3 and 4, we require firms in our sample to be listed
continuously between 2010 and 2018. In columns 1 and 3, we use our baseline control group of rejecters.
In columns 2 and 4, we use our extended control group comprised of both rejecters and early adopters.
Constants are omitted from the table for brevity. See Appendix B for variable definitions. Standard errors
robust to heteroscedasticity are reported in parentheses below each point estimate. ***, **, and * indicate
statistical significance at the 1%, 5%, and 10% level, respectively, based on a two-tailed t-test.
(1) (2) (3) (4)

Foreign Institutional Ownership Baseline Sample Extended Sample Baseline Sample Extended Sample
2012-2016 2012-2016 2010-2018 2010-2018
Post x Default Adopters -4.461*** -2.916*** -4.683*** -2.860***

(1.043) (0.624) (1.104) (0.646)
Controls Yes Yes Yes Yes
Observations 707 2,374 640 2,168

61

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The Capital Market Consequences of Tenure-Based

Voting Rights: Evidence from the Florange Act∗

Tuesday 30th March, 2021

We examine the consequences of a regulatory intervention aimed at generalizing

Keywords: Governance Regulation; Institutional Ownership; Corporate Myopia; ESG

JEL Classification: G32, G34

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3.1 Sample Selection

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Double-voting rights To assess whether a company granted double-voting rights to

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4.1 Descriptive Statistics

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4.2 Ownership Composition

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P ct Ownership T ypeit = β0 + β1 P ostit X Def ault Adopters + Xit + αi + γt + it

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To examine the value implication of the introduction of double-voting rights by default, we

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4.4 Corporate Decisions

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4.5 Additional Tests

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Variables #Obs. Mean S.D. 0.25 Mdn 0.75

Nb. Antitakeover Devices 719 1.57 1.28 1.00 1.00 2.00

French Ownership (%) 2,936 52.12 29.14 26.78 58.06 73.49

Tobin’s Q 2,936 1.47 1.00 0.57 1.17 1.56

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Panel A: Comparison between early adopters and non-voluntary adopters

Non-Voluntary Early Difference P-value

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Rejecters Default Adopters Diff P-value

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(1) (2) (3) (4) (5) (6) (7)

P ct Ownership T ypeit = β0 + β1 P ostit X Def ault Adopters + Xit + αi + γt + it

Tenure-Based Voting 1.141* 0.087 0.019 0.004 0.226* 0.706* -28.517***

Post x Default Adopters -3.809* -3.968* -2.637* -2.731*

Post x Default Adopters -0.292 4.309* 0.815

Post x Default Adopters -3.798* -1.160 -4.959* -0.169 0.869 0.700

Post x Default Adopters -2.093* -1.706

Constant 0.53 0.47 0.51 0.50 0.46 0.48

Post x Default Adopters -6.268* -7.101* -6.016 -8.703

Post x Default Adopters -7.642* -2.358 -6.449* -2.984 -21.866***

Post x Default Adopters -4.461* -2.916* -4.683* -2.860*