Evolution of Corporate Governance During the Recent Financial Crises

A domino effect can accelerate the spread of financial crises. Some firms, however, show better resistance than others thereby limiting the spread. Effective governance mechanisms enhance the ability of firms to absorb a stock market crisis. In a sample of Société des Bourses Françaises (SBF) 120 firms, significant changes in corporate governance scores are observed during the financial crises of 2006-2008. We find that most French firms show a fairly satisfactory level of compliance with OECD governance principles. The results also suggest that stronger corporate governance practices should improve the visibility of the firm by the market