Corporate Governance in Germany: An Economic Perspective
A financial system can only perform its function of channelling funds from savers to investors if it offers sufficient assurance to the providers of the funds that they will reap the rewards which have been promised to them. To the extent that this assurance is not provided by contracts alone, potential financiers will want to monitor and influence managerial decisions. This is why corporate governance is an essential part of any financial system. It is almost obvious that providers of equity have a genuine interest in the functioning of corporate governance. However, corporate governance encompasses more than investor protection. Similar considerations also apply to other stakeholders who invest their resources in a firm and whose expectations of later receiving an appropriate return on their investment also depend on decisions at the level of the individual firm which would be extremely difficult to anticipate and prescribe in a set of complete contingent contracts. Lenders, especially long-term lenders, are one such group of stakeholders who may also want to play a role in corporate governance; employees, especially those with high skill levels and firm-specific knowledge, are another. The German corporate governance system is different from that of the Anglo-Saxon countries because it foresees the possibility, and even the necessity, to integrate lenders and employees in the governance of large corporations. The German corporate governance system is generally regarded as the standard example of an insider-controlled and stakeholder-oriented system. Moreover, only a few years ago it was a consistent system in the sense of being composed of complementary elements which fit together well. The first objective of this paper is to show why and in which respect these characterisations were once appropriate. However, the past decade has seen a wave of developments in the German corporate governance system, which make it worthwhile and indeed necessary to investigate whe
(This abstract was borrowed from another version of this item.)
|Date of creation:||2004|
|Contact details of provider:|| Postal: Senckenberganlage 31, 60054 Frankfurt|
Web page: http://www.finance.uni-frankfurt.de
More information through EDIRC
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.:
- Franks, Julian R & Mayer, Colin & Renneboog, Luc, 2001.
"Who Disciplines Management in Poorly Performing Companies?,"
CEPR Discussion Papers
2949, C.E.P.R. Discussion Papers.
- Franks, Julian & Mayer, Colin & Renneboog, Luc, 2001. "Who Disciplines Management in Poorly Performing Companies?," Journal of Financial Intermediation, Elsevier, vol. 10(3-4), pages 209-248, July.
- Luc Renneboog & Julian Franks & Colin Mayer, 1999. "Who Disciplines Management in Poorly Performing Companies?," OFRC Working Papers Series 1999fe01, Oxford Financial Research Centre.
- Alexander Dyck & Luigi Zingales, 2002.
"Private Benefits of Control: An International Comparison,"
NBER Working Papers
8711, National Bureau of Economic Research, Inc.
- Alexander Dyck & Luigi Zingales, 2004. "Private Benefits of Control: An International Comparison," Journal of Finance, American Finance Association, vol. 59(2), pages 537-600, 04.
- Dyck, Alexander & Zingales, Luigi, 2002. "Private Benefits of Control: An International Comparison," CEPR Discussion Papers 3177, C.E.P.R. Discussion Papers.
- Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
- Gorton, Gary & Schmid, Frank A., 2000.
"Universal banking and the performance of German firms,"
Journal of Financial Economics,
Elsevier, vol. 58(1-2), pages 29-80.
- Gary Gorton & Frank A. Schmid, 1996. "Universal Banking and the Performance of German Firms," NBER Working Papers 5453, National Bureau of Economic Research, Inc.
- Jeremy S. S. Edwards & Alfons J. Weichenrieder, 2004. "Ownership Concentration and Share Valuation," German Economic Review, Verein für Socialpolitik, vol. 5(2), pages 143-171, 05.
- Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
- William R. Emmons & Frank A. Schmid, 1998. "Universal banking, control rights, and corporate finance in Germany," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 19-42.
- Michael Adams, 1999. "Cross Holdings in Germany," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(1), pages 1-80, March.
- Reinhard H. Schmidt & Marcel Tyrell, 2001. "Pension Systems and Financial Systems in Europe: A Comparison from the Point of View of Complementarity," Working Paper Series: Finance and Accounting 65, Department of Finance, Goethe University Frankfurt am Main.
- Reinhard H. Schmidt & Gerald Spindler, 2002.
"Path Dependence, Corporate Governance and Complementarity,"
Working Paper Series: Finance and Accounting
27, Department of Finance, Goethe University Frankfurt am Main.
- Schmidt, Reinhard H & Spindler, Gerald, 2002. "Path Dependence, Corporate Governance and Complementarity," International Finance, Wiley Blackwell, vol. 5(3), pages 311-333, Winter.
- Dherment-Ferere, Isabelle & Köke, Jens & Renneboog, Luc, 2001. "Corporate monitoring by blockholders in Europe: empirical evidence of managerial disciplining in Belgium, France, Germany, and the UK," ZEW Discussion Papers 01-24, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- repec:oxf:wpaper:1999-fe-01 is not listed on IDEAS
- A. Hackethal & Reinhard H. Schmidt, 2004. "Financing Patterns: Measurement Concepts and Empirical Results," Working Paper Series: Finance and Accounting 125, Department of Finance, Goethe University Frankfurt am Main.
When requesting a correction, please mention this item's handle: RePEc:fra:franaf:118. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Reinhard H. Schmidt)
If references are entirely missing, you can add them using this form.