Learning to love shareholders

When the concepts of shareholder value and corporate governance were virtually unknown outside US business schools, the country which above all epitomized the way things were done in continental Europe was France. Wielding a largely state-owned financial sector, French governments of both left and right have long been dirigiste. But even in France things are changing.

Privatizations were the first step. For much of the 1980s France's biggest banks were state-owned, having been set up as state-owned entities after World War II or nationalized by the Socialist government in 1981. Over the past 10 years most have passed into private hands.

But this was privatization with distinctly French characteristics. In the late 1980s, the government of prime minister Edouard Balladur appointed selected henchmen at the helm of each of the privatized banks and companies and set up an intricate network of cross-shareholdings between the country's largest financial and non-financial institutions....