Change in the German Model of Corporate Governance: Evidence from Blockholdings 1997–2001

Abstract

In order to research the dynamics of the German model of corporate governance, data pertaining to major holdings of voting rights in listed companies between 1997 and 2001 were examined. The change that took place in this short period of time is striking, with falling level of ownership concentration, dissolving cross-holdings, and financial sector institutions losing their position as blockholders. The concentration of voting rights is lowest in companies included in the DAX30 stock market index. Factors affecting the types of holders of voting rights in a company include company's size, age, economic sector, and location. The analysis shows that Germany made a quick step towards some aspects of the Anglo-American system of corporate governance. However, there are also areas of strong persistence. In addition, I show that the German model is far from uniform, with different types of companies and different regions demonstrating a variety of corporate governance arrangements, as well as distinctive development trajectories.

Financial Valuation of the German Model: The Negative Relationship Between Ownership Concentration and Stock Market Returns, 1997-2001

“…There are six Länder that host at least five DAX100 companies. Combining these findings with our previous research (see Clark and Wójcik 2003;Wójcik 2002Wójcik , 2003, we claim that regionally nested regimes of corporate governance exist that have profound implications for the valuation of their constituent companies on the German markets. The typical size of the largest holding of voting rights in a DAX100 company in Baden-Württemberg is almost twice as large as that in Hesse.…”

“…For this purpose, we used concentration of ownership, acknowledged as a central concept in the theory of corporate governance (Morck 2000) and a central feature of corporate governance in Germany Wójcik 2003). For this purpose, we used concentration of ownership, acknowledged as a central concept in the theory of corporate governance (Morck 2000) and a central feature of corporate governance in Germany Wójcik 2003).…”

“…First, whatever the historical significance of concentrated ownership for the German model, in recent years, global and European portfolio investors have played an increasing role in "pricing" the virtues or otherwise of German corporate governance (cf. 1-81102-clark 14 The geography of German corporate governance has a strong urban dimension (Wójcik 2002). Second, as is the case in many other jurisdictions, portfolio investors are concerned about the potential for exploitation-that is, the likelihood that their place as minority owners, and largely passive owners at that, may be exploited by other better-placed owners with greater access to private information.…”

“…It is tempting to analyze nation-state stock markets as if they are just like Anglo-American markets. Even so, the performance of Deutschland AG may have significant implications for the network of closely related local (untraded) firms, just as recent reforms of German corporate governance, which were designed to promote institutional innovation consistent with financial market imperatives, may have substantial implications for the penetration of global finance to the local level (Wójcik 2003). But German stock markets are smaller than their Anglo-American counterparts in terms of traded volume and more concentrated in terms of the share of traded volume that is due to the largest corporations.…”

Are German, Japanese and Anglo‐Saxon Strategic Decision Styles Still Divergent in the Context of Globalization?*

“…[20] [20] This edited collection analyses numerous institutional changes as, for example, Streeck and Hassel (2004) dealing with recent political and trade union changes; also see Bogler (2002); Schmidt and Williams (2002); Wojcik (2002). …”