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The Origins of the German Corporation – Finance, Ownership and Control

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Author Info
Julian Franks (London Business School, Sussex Place Regent’s Park, London NW1 4SA, England, jfranks@london.edu)
Colin Mayer (Saïd Business School, University of Oxford, Park End Street, OX1 1HP Oxford, England, colin.mayer@sbs.ox.ac.uk)
Hannes F. Wagner (Munich School of Management, Ludwig Maximilians University of Munich, Schackstrasse 4, D-80539 Muenchen, Germany, hwagner@bwl.uni-muenchen.de)

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Abstract

The ownership of German corporations is quite different today from that of Anglo-American firms. How did this come about? To what extent is it attributable to regulation? A specially constructed data set on financing and ownership of German corporations from the end of the 19th century reveals that, as in the UK, there was a high degree of activity on German stock markets with firms issuing equity in preference to borrowing from banks, and insider and family ownership declining rapidly. However, unlike in the UK, other companies and banks emerged as the main holders of equity, with banks holding shares primarily as custodians of other investors rather than on their own account. The changing pattern of ownership concentration was therefore very different from that of the UK with regulation reinforcing the control that banks exercised on behalf of other investors.

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Publisher Info
Paper provided by SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Papers with number 65.

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Date of creation: Oct 2005
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Handle: RePEc:trf:wpaper:65

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Related research
Keywords: Evolution of ownership; German stock markets; financial regulation;

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Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Newey, Whitney K & West, Kenneth D, 1987. "A Simple, Positive Semi-definite, Heteroskedasticity and Autocorrelation Consistent Covariance Matrix," Econometrica, Econometric Society, vol. 55(3), pages 703-08, May. [Downloadable!] (restricted)
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  2. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 2003. "What Works in Securities Law?," NBER Working Papers 9882, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Julian Franks & Colin Mayer & Stefano Rossi, 2003. "Spending Less Time with the Family: The Decline of Family Ownership in the UK," OFRC Working Papers Series 2003fe15, Oxford Financial Research Centre. [Downloadable!]
    Other versions:
  4. Caroline Fohlin, 2005. "The History of Corporate Ownership and Control in Germany," NBER Chapters, in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 223-282 National Bureau of Economic Research, Inc. [Downloadable!]
  5. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December. [Downloadable!] (restricted)
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  6. Edwards, Jeremy & Ogilvie, Sheilagh C., 1995. "Universal Banks and German Industrialization: A Reappraisal," CEPR Discussion Papers 1171, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Julian FRANKS & Colin MAYER & MIYAJIMA Hideaki, 2009. "Equity Markets and Institutions: The case of Japan," Discussion papers 09039, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  2. Jochen Moebert & Patrick Tydecks, 2007. "Power and Ownership Structures among German Companies A Network Analysis of Financial Linkages," Darmstadt Discussion Papers in Economics 179, Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology). [Downloadable!]
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