Shareholder Activism in Continental Europe

Due to prominent activist campaigns especially in the U.S. against Dell, Apple and Ebay and its equally prominent protagonists like Carl Icahn or Paul Singer, shareholder activism became a regular topic in national and international business outlets in recent years and therefore known to a broader public. A recent analysis of Bain & Company (2015) underpins this observation and emphasises that the worldwide number of activist approaches rose by an average of 34% per year since 2000. The relevance of shareholder activism is also shown in the study as 8% of the total capital invested in hedge funds worldwide, i.e. 3 trillion USD, is controlled already by shareholder activist funds. Since its origins in the 1980s, the academic world has always been fascinated by shareholder activism as research subject and its impact on corporates, its management and supervisory bodies, share prices as well as operating and financial performance of the activists’ target companies. Most research focuses on the U.S. corporate environment whereas the topic is still rarely researched in Continental Europe. Therefore, the main purpose of this dissertation is to fill this research gap and to provide an in-depth analysis of shareholder activism in Continental Europe in general and Germany in specific, its key players and the main characteristics of the Continental European and German corporate governance system and corporate environment compared to Anglo-Saxon jurisdictions. The first study analyses the investment activities and returns of shareholder activist and hedge fund manager Guy Wyser-Pratte as well as his success and failure rate to enforce his demands against the management and supervisory bodies of the approached companies in Continental Europe between 2001 and 2011. The second study is an in-depth clinical study of a specific single activist investment of Guy Wyser-Pratte in Germany which shows in detail the confrontation between an activist shareholder, a typical German medium sized company and a German family business investor which is – compared to Anglo-Saxon jurisdictions – a common element of the investor universe in Continental Europe and especially in Germany. The third study compares the investment activities of Continental European family business investors with private equity funds to identify any similarities and differences in their investment approach in more detail for the first time and to clarify if family business investors should be taken into consideration as another key player in future research on shareholder activism in Continental Europe. This doctoral thesis proceeds as follows. The next subchapter of the introduction gives an overview of shareholder activism, its origins and key players in the context of this dissertation. The subsequent section identifies the specifics of the Continental European and German corporate governance environment compared to the predominant system in Anglo-Saxon jurisdictions like the U.S. and the U.K. The section continues with an overview of the existing literature on shareholder activism and its related topics, especially with focus on research from the U.S., Continental Europe and Germany. The three subsequent sections include the theoretical framework, development of hypothesis and some explanatory remarks on the process of data collection and the corresponding test statistics. The introductory chapter ends with a brief presentation of the three research papers and their contribution to literature. The dissertation proceeds with the detailed presentation of the previously mentioned three studies and ends with a summary of the key research findings.