A trust-based perspective on French political economy: law and corporate control in corporate governance reform

With reference to French corporate governance reform, this study presents a trust-based argument to explain why laws and corporate controls still maintain the exception francaise despite a substantial shift towards the American shareholder-oriented model. The trust-based perspective draws on the characteristic form of trust in French political economy: personal-centred but relatively low levels of trust that are nurtured through social hierarchies, less porous elite networks, and conflictual industrial relations. Analysing the legal changes and control modes in large French firms since the mid-1990s, this study argues that the characteristic form of trust in the French political economy helped to maintain conventional French laws and corporate controls, such as double voting rights and state influence. In contrast to economic or political perspectives, which emphasise the outcomes of changes to corporate governance, a trust-based perspective sheds light on the societal causes of a path-dependent trajectory in a changing political economy.