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Corporate governance and employee power in the boardroom: An applied game theoretical analysis

  • Balsmeier, Benjamin
  • Bermig, Andreas
  • Dilger, Alexander
  • Geyer, Hannah

The discussion about employee representation on supervisory boards has received much attention from scholars and politicians around the world. We provide new insights to this ongoing debate by employing power indices from game theory to examine the real power of employees on boards and its effect on firm performance. Based on unique panel data of the largest listed companies in Germany, we find an inversely U-shaped relationship between labour power and Tobin's Q with a value-maximising labour power of approximately 43 %. Our results are robust to different game theoretical calculations of labour power, as well as various econometric models.

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Paper provided by University of Münster, Institute for Organisational Economics in its series Discussion Papers of the Institute for Organisational Economics with number 9/2011.

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Date of creation: 2011
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Handle: RePEc:zbw:umiodp:92011
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