Insider control by large investor groups and managerial disciplining in listed Belgian companies

Defines corporate governance, describes the special characteristics of Belgian companies and presents a study of the disciplining of bad management in 165 companies listed on the Brussels stock exchange 1989‐1996. Finds that poor share price performance is generally linked to a higher turnover of directors except in holding companies and that several measures of poor accounting performance are linked to higher director and CEO turnover, although there is more resistance to this in large companies and less in those with a higher proportion of non‐executive directors or total/foreign ownership. Shows that negative after‐tax earnings lead owners with strong monitoring abilities (e.g. holding companies) to increase their stake while others (e.g. families and institutional shareholders) reduce it; and that CEO replacement is followed by increased dividends. Summarizes the findings, noting the differences between the finance sector and others.