The Salience of Employee-Shareholder Board Representation in Family Firms: Towards Equal Treatment of Minority Shareholders

Abstract

This study examines whether employee-shareholder board representatives are sufficiently salient to management to enhance the equal treatment of minority shareholders. Using data from French SBF 120 firms over the period 2002–2020, we show that this form of hybrid representation, combining labour and capital interests, is positively associated with stronger protection of minority shareholders. Importantly, the effect is substantially stronger in family-controlled firms, where concentrated ownership and socioemotional wealth considerations heighten the risk of minority shareholder expropriation and increase the relevance of hybrid employee-shareholder directors as monitors. By contrast, labour board representation shows no systematic relationship with minority shareholder protection, underscoring the distinct governance role played by employee-shareholder representatives. These findings suggest that employee-shareholder board representation functions as a responsible governance mechanism that both strengthens monitoring and signals a commitment to fair treatment of outside investors. More broadly, the results illustrate how emerging forms of worker involvement challenge traditional boundaries between labour and capital in corporate governance, highlighting the need to extend industrial relations theory to account for hybrid stakeholder roles, particularly in family firms.