Abstract:

This paper examines the relationship between stock price fluctuations, independent and institutional directors using simultaneous-equation panel data models for a panel of 89 French listed companies on the SBF 120 over the 2006-2013 periods. Our results indicate that there is evidence of bidirectional causality between independent directors and stock price fluctuation.  The relative ROA, the firm‘s size and the stock price fluctuations are interrelated i.e. a bidirectional causality. A Neutral hypothesis is identified between the stock price fluctuation and the debt ratio. Our empirical results show that the independent directors and the relative ROA stabilize the stock price fluctuations. This study employs a variety of econometric models, including feedback, to test the robustness of our empirical results.