**4. Conclusion**

This study investigated the relationship between the internal mechanisms of corporate governance and the stock return volatility on panel data models of 89 firms over the period of 2006–2012.

Concerning the relation between the internal mechanisms of corporate governance and stock return volatility, our results based on the three-stage least squares for simultaneous equations, in this area we can see that the outside directors (FD) and audit size have a positive and significant impact on the stock return volatility, and our results showed that the outside directors (FD) and audit size increase the stock return volatility. Also, we found that the independent directors and ROA have a negative effect on the stock return volatility; this result indicates that these variables contribute to decrease and stabilize the stock return volatility.

For the linkages between stock returns volatility and risk management (exchange rate, treasury bills), our study focuses on French companies composing the SBF 120 during 2006–2013. Our results confirm that an exchange rate is negatively and significantly correlated with the stock return volatility. This result indicates that these variables contribute to decrease and stabilize the stock return volatility. Moreover, the treasury bills have a positive effect on the stock return volatility.

Our results showed that the stationarity constraint of the model is verified (α + β < 1) for all the equations, which supports a weak presence of effect ARCH and GARCH in all the cases except for stock index, board of directors, and inv. inst., i.e., (α + β) ≥ 1 has a high persistence of volatility shocks.

The principal connotation, which occurs from our study, can be posted as follows. The results of this paper are particularly important for research on institutional investor in the French markets and the firm's stock price fluctuation. This paper provides evidence that confirms the benefits of institutional investors in the French markets. Moreover, the finding in this paper suggests that intuitional investors in France are beneficial for the economy not only because for their contribution to the invested firms but also due to the stabilizing effect benefits in macroeconomic perspectives. This paper also has clear policy implications for the government. Firstly, it provides an empirical investigation to clarify the role of the institutional investor's participation. It clearly suggests that the existence of more
