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The Role of Hostile Stakes in German Corporate Governance

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  • Tim Jenkinson
  • Alexander Ljungqvist

Abstract

This paper uses clinical evidence to show how the German system of corporate control and governance is both more active and more hostile than has previously been suggested. It provides a complete breakdown of ownership and takeover defence patterns in German listed companies and finds highly fragmented (but not dispersed) ownership in non-majority controlled firms. We document how the accumulation of hostile stakes can be used to gain control of target companies given these ownership patterns. The paper also suggests an important role for banks in helping predators accumulate, and avoid the disclosure of, large stakes.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 1999-FE-02.

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Date of creation: 01 Aug 1999
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Handle: RePEc:oxf:wpaper:1999-fe-02

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Keywords: corporate governance; block trades; takeovers; banks; Germany;

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  10. Randall Morck & Andrel Shleifer & Robert W. Vishny, 1988. "Alternative Mechanisms for Corporate Control," University of Chicago - George G. Stigler Center for Study of Economy and State, Chicago - Center for Study of Economy and State 52, Chicago - Center for Study of Economy and State.
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  13. Becht, Marco & Roell, Ailsa, 1999. "Blockholdings in Europe:: An international comparison1," European Economic Review, Elsevier, Elsevier, vol. 43(4-6), pages 1049-1056, April.
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  16. Wruck, Karen Hopper, 1989. "Equity ownership concentration and firm value : Evidence from private equity financings," Journal of Financial Economics, Elsevier, Elsevier, vol. 23(1), pages 3-28, June.
  17. Marco Becht & Ailsa Röell, 1999. "Blockholdings in Europe: an international comparison," ULB Institutional Repository 2013/13316, ULB -- Universite Libre de Bruxelles.
  18. Mikkelson, Wayne H. & Ruback, Richard S., 1985. "An empirical analysis of the interfirm equity investment process," Journal of Financial Economics, Elsevier, Elsevier, vol. 14(4), pages 523-553, December.
  19. Franklin Allen & Douglas Gale, 1994. "A Welfare Comparison of the German and U.S. Financial Systems," Center for Financial Institutions Working Papers, Wharton School Center for Financial Institutions, University of Pennsylvania 94-12, Wharton School Center for Financial Institutions, University of Pennsylvania.
  20. Franklin Allen & Douglas Gale, . "A Welfare Comparison of the German and U.S. Financial Systems (Reprint 047)," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 13-94, Wharton School Rodney L. White Center for Financial Research.
  21. Barclay, Michael J & Holderness, Clifford G, 1992. "The Law and Large-Block Trades," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 35(2), pages 265-94, October.
  22. Grundfest, Joseph A., 1990. "Subordination of American capital," Journal of Financial Economics, Elsevier, Elsevier, vol. 27(1), pages 89-114, September.
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