This article reviews Germany's corporate governance system and the effectiveness of recent reforms. Since the early 1990s far-reaching reforms have complemented the traditional stakeholder system ...with important elements of the shareholder system. Instead of taking a view on the superiority of either system, this article raises the important question whether these reforms created sufficient flexibility for the market to optimize its corporate governance structure within well established social and legal norms. It concludes that there is scope for enhancing flexibility in three core areas, relating to (i) internal control mechanisms, especially the flexibility of board structures; (ii) self-dealing; and (iii) external control, particularly take-over activity.
The paper examines causes and effects of ownership concentration among the largest companies in 12 European countries. As a reference point the paper takes a seminal empirical study on US data and ...examines to what extent the model is applicable in European countries. The findings indicate that both general economic effects and system effects are significant. Ownership concentration is found to decrease with firm size and to increase with earnings volatility. But in support of the system theories advocated nationality is also found to have a significant effect which is partly attributable to institutional differences between nations such as stock market size and the frequency of large banks. Finally ownership concentration is found to have an insignificant effect on accounting profitability (return on equity)
Using a panel data set of 361 German corporations for the period 1991-1996 we test the hypothesis that firms with more efficient governance structures have higher profitability. To determine ...efficiency we compare firms with respect to ownership concentration, the identity of owners, capital structure, investment and firm growth by a multi-input/multi-output Data Envelopment Analysis (DEA). This non-parametric linear programming technique considers both multiple in- and out-puts. Based on the concept of pareto efficiency, it computes an efficiency score where the associated weights of the inputs and outputs are determined endogenously. The DEA efficiency scores are then used as explanatory variables in panel data regressions of profitability. Our main finding is that the efficiency scores indeed contribute significantly to explaining profitability differences between firms, even after controlling for industry effects and unobserved systematic firm effects. PUBLICATION ABSTRACT
Believed to be a robust alternative to Anglo-American market capitalism, the virtues of the German model are increasingly disputed as doubts are raised about its long-term prospects. At the core of ...the German model is a system of corporate governance that is characterized by concentrated ownership and cross-holdings of stocks among related firms and their financial service providers. When combined with workers' representation on corporate supervisory boards, concentrated ownership is thought to encourage a longer-term competitive and investment strategy. Using a unique data set on German corporate voting rights and insights gleaned from intensive interviews with German and international financial institutions, we analyze daily stock market prices from 1997 to 2001, testing for the value attributed to concentrated ownership by financial markets. We show that financial markets discount ownership concentration in ways that are consistent with Anglo-American conceptions of shareholder value, rather than with the logic of the German model. There is a significant negative relationship between ownership concentration and the average daily rate of return (as measured by closing stock market prices). This is an important finding for firms in the DAX100 and is the most pronounced for firms in the DAX30. Implications of these findings for the continued significance of distinctive regional systems of accumulation are considered in the final sections.
When foreigners became the major shareholders of publicly traded firms in the Czech Republic, those firms experienced improvements in performance and increases in investment. In contrast, controlling ...for ownership type, ownership concentration had no independent effect on performance or investment. The results are robust to the estimation technique used, the choice of independent variables, and the methods used to control for selection bias.
The cross-sectional share price variation in eight East Asian markets before, during and after the 1997 Asian financial crisis is examined. The paper also studies whether firms in these markets ...correct their share prices to the optimal trading range using stock splits. The results vary across countries, across firms and across periods. Although some anomalies in some markets are found, most results are consistent with Merton's (1987) investor recognition hypothesis in an incomplete information market. Small firms as less-recognised firms choose low prices to attract small shareholders, thus increasing their shareholder base and the firm's value. Ownership concentration and corporate governance are found to be very important in explaining cross-sectional stock price variation. Specifically, small firms in Hong Kong, Malaysia and Thailand made stock splits to maintain their preferred share prices.
This paper analyses ownership concentration in six European countries and empirically studies the rent-seeking theory. This theory states that ownership concentration not only depends on the level of ...investor protection but also on company-specific and industry-specific parameters. This study analyses the sector-specific ownership patterns of listed corporations. The results only partially confirm the influence of industry-specific characteristics. Different industries are characterized by different shareholder concentration patterns. Hence, and in light of the rent-seeking theory, it is plausible that company's specific characteristics, like the identity of the largest shareholder, the risk of the firm, etc. influence rent-seeking behavior.
Using data for publicly traded companies from the UK and two transition countries, the Czech Republic and Poland, we analyze the relationship between ownership concentratio and performance while also ...accounting for the effect of hostile takeover threats on this relationship. Some argue that ownership concentration will improve performance by making the owners more willing or able to monitor managers. Others argue that in the presence of efficient markets, market monitoring (via the threat of hostile takeovers) will discipline the managers. Our results show that concentration is insignificant in explaining performance both in the transition countries, where market monitoring is supposedly weak, and in the UK, where market monitoring is supposedly strong.
Glavni cilj ovog istraživačkog rada je ispitati utjecaj veličine nadzornog odbora i koncentracije vlasništva, kao mehanizama korporativnog upravljanja, na troškove agenta u velikim hrvatskim ...poduzećima. Uz to, ispituje se utjecaj financiranja dugom i stope rasta poduzeća, varijabli koje također mogu imati utjecaj na troškove agenta. Teorija agenta definira okvir za potencijalne probleme koji nastaju prilikom razdvajanja vlasništva i upravljanja, kao i za sukob između vlasnika (principala) i menadžera (agenta). Najznačajniji problem u navedenom odnosu su troškovi agenta, međutim, njih nije moguće izravno mjeriti; sukladno tome u ovom istraživanju autori su troškove agenta aproksimirali putem koeficijenta obrtaja ukupne imovine. Istraživački rad obuhvaća empirijsko testiranje utjecaja veličine nadzornog odbora, koncentracije vlasništva, financiranja dugom i stope rasta poduzeća na troškove agenta u promatranom razdoblju od 2014. do 2018. pomoću analize panel podataka. Istraživanje je provedeno na velikim hrvatskim poduzećima koristeći podatke i informacije iz službenih godišnjih financijskih izvješća kako bi se osigurala objektivnost i usporedivost podataka. Istraživanjem je obuhvaćeno 219 poduzeća koja posluju u sljedećim djelatnostima: prerađivačka industrija (C) i trgovina na veliko i na malo; popravak motornih vozila i motocikala (G) sukladno Nacionalnoj klasifikaciji djelatnosti. Rezultati analize identificirali su značajan i negativan utjecaj veličine nadzornog odbora na troškove agenta. Financiranje dugom i stopa rasta imaju značajan i negativan utjecaj na troškove agenta. Istraživanjem nije utvrđen značajan utjecaj koncentracija vlasništva na troškove agenta.
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