Labor Participation in Corporate Policy-Making Decisions: West Germany's Experience with Codetermination
If workers are wealth maximizers, codetermination should lead to less risky investments, smaller dividends, reduced firm leverage, higher and more stable salaries, and more capital- intensive production processes. Unless codetermination also increases productivity by raising workers' morale and satisfaction or reduces information asymmetries within the firm, shareholder wealth and firm value will decline. An analysis of West Germany's case, however, indi cates that codetermination has little, if any, effect on corporate op erations and performance. Copyright 1987 by the University of Chicago.