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Volkswagen vs. Porsche: a power-index analysis

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  • Roland Kirstein

Abstract

If Porsche had completed the attempted takeover of Volkswagen, the supervisory board of Porsche SE would have consisted of three groups: Porsche shareholders with six seats, the 324,000 Volkswagen employees and the 12,000 Porsche employees with three delegates each. This paper presents a power-index analysis of the possible supervisory board compositions. It shows that, unless the Porsche employees are made completely powerless, the Porsche and VW employee representatives will have identical power regardless of the actual distribution of seats on the employees' side. This analysis sustains the judgment issued by a German labour court which rejected the request of the Volkswagen works council for more seats than the Porsche employees. Equal power per represented employee could be implemented using a 'randomised decision rule'.

Suggested Citation

  • Roland Kirstein, 2010. "Volkswagen vs. Porsche: a power-index analysis," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 2(1), pages 1-20.
    • Handle: RePEc:ids:ijcgov:v:2:y:2010:i:1:p:1-20
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    1. Shapley, L. S. & Shubik, Martin, 1954. "A Method for Evaluating the Distribution of Power in a Committee System," American Political Science Review, Cambridge University Press, vol. 48(3), pages 787-792, September.
    2. Bernard Steunenberg & Dieter Schmidtchen & Christian Koboldt, 1999. "Strategic Power in the European Union," Journal of Theoretical Politics, , vol. 11(3), pages 339-366, July.
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    Cited by:

    1. Roland Kirstein & Matthias Peiss, 2013. "Quantitative Machtkonzepte in der Ökonomik," FEMM Working Papers 130004, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    2. Balsmeier, Benjamin & Bermig, Andreas & Dilger, Alexander, 2013. "Corporate governance and employee power in the boardroom: An applied game theoretic analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 91(C), pages 51-74.

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    More about this item

    Keywords

    Banzhaf power index; supervisory board composition; Societas Europeae; Porsche; Volkswagen; VW works council; random decision rule; takeover; corporate governance; shareholders; employees; supervisory board members; Germany; labour courts.;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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