Does good corporate governance include employee representation? Evidence from German corporate boards

Fauver, Larry; Fuerst, Michael E.

doi:10.1016/j.jfineco.2005.10.005

Cited by 309 publications

(80 citation statements)

References 50 publications

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“…Thus the inclusion of employee representatives on the Board may enhance its ability to cope with firm-specific information and intangibles, especially those related to human capital. This analysis is consistent with the empirical evidence provided by Fauver and Fuerst (2006), who show that the inclusion of worker representatives on the (supervisory) Boards of German firms is positively correlated (up to a certain point) with the performance of those firms.…”

Section: Board Independence and Firm-specific Expertise: The Tradsupporting

confidence: 91%

Financial Disclosure and the Board: A Case for Non-Independent Directors

2010

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-In listed companies, the Board of directors has ultimate responsibility for information disclosure. The conventional wisdom is that director independence is an essential factor in improving the quality of that disclosure. In a sense, this approach subordinates expertise to independence. We argue that effective certification may require firm-specific expertise, in particular for intangible-intensive business models. However, this latter form of expertise is negatively related to independence as it is commonly measured and evaluated. Accordingly, there exists an optimal share of independent directors for each company, related to the level of intangible resources.

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Section: Board Independence and Firm-specific Expertise: The Tradsupporting

confidence: 91%

Financial Disclosure and the Board: A Case for Non-Independent Directors

2010

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“…The result that stakeholder governance can increase firm value rather than decrease it finds some support in Gorton and Schmid (2004) and Fauver and Fuerst (2006), although the precise mechanism through which this happens is yet to be identified empirically. The importance of having a framework for modeling and understanding the differences between stakeholder firms and shareholder firms has also emerged in the current financial crisis.…”

Section: Introductionmentioning

confidence: 99%

Stakeholder Capitalism, Corporate Governance and Firm Value

2009

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In countries such as Germany, the legal system ensures that firms are stakeholder oriented. In others, like Japan, social norms achieve a similar effect. We analyze the advantages and disadvantages of stakeholderoriented firms that are concerned with employees and suppliers compared to shareholder-oriented firms in a model of imperfect competition. Stakeholder firms are more (less) valuable than shareholder firms when marginal cost uncertainty is greater (less) than demand uncertainty. With globalization shareholder firms and stakeholder firms often compete. We identify the circumstances where stakeholder firms are more valuable than shareholder firms, and compare these mixed equilibria with the pure equilibria with stakeholder and shareholder firms only. Abstract In countries such as Germany, the legal system ensures that firms are stakeholder oriented. In others, like Japan, social norms achieve a similar effect. We analyze the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers compared to shareholder-oriented firms in a model of imperfect competition. Stakeholder firms are more (less) valuable than shareholder firms when marginal cost uncertainty is greater (less) than demand uncertainty. With globalization shareholder firms and stakeholder firms often compete. We identify the circumstances where stakeholder firms are more valuable than shareholder firms, and compare these mixed equilibria with the pure equilibria with stakeholder and shareholder firms only. The results have interesting implications for the political economy of foreign entry. * In countries such as Germany, the legal system ensures that firms are stakeholder oriented. In others, like Japan, social norms achieve a similar effect. We analyze the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers compared to shareholder-oriented firms in a model of imperfect competition. Stakeholder firms are more (less) valuable than shareholder firms when marginal cost uncertainty is greater (less) than demand uncertainty. With globalization shareholder firms and stakeholder firms often compete. We identify the circumstances where stakeholder firms are more valuable than shareholder firms, and compare these mixed equilibria with the pure equilibria with stakeholder and shareholder firms only. The results have interesting implications for the political economy of foreign entry.

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“…Their results are consistent with Hillman and Keim (2001) and Claessens and Ueda (2008), who find that greater stakeholder involvement in the form of stakeholder management or employment protection improves efficiency and firm value. Likewise, Fauver and Fuerst (2006) and Ginglinger et al (2009) find that employee representation on the board increases firm value as measured by Tobin's Q and profitability. In addition, stakeholder governance may reduce the probability of failure, which increases debt capacity and consolidates a close relationship between banks and firms such as, for instance, in the hausbank system in Germany (Allen et al 2009a).…”

Section: The Politics Of Fair Value Reportingmentioning

confidence: 95%

The Politics of Fair Value Reporting and the Governance of the Standards-Setting Process: Critical Issues and Pitfalls from a European Perspective

Palea

2013

SSRN Journal

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ABSTRACT:Accounting is not simply a metric; rather it is a calculative practice which shapes the socio-economic environment. Therefore, looking only at the substance of accounting standards is sometimes inadequate. From a European Union perspective, this paper provides a general framework that deals with the potential changes in society produced by financial reporting. More specifically, it discusses fair value reporting from two points of view, which are strictly linked. The first relates to the politics of fair value accounting and its potential impact on the economic and social system, while the second relates to the governance of the standardssetting process. Financial regulation is one of the competencies of the European Union. Therefore, this paper claims that controversial issues in financial reporting should be examined in the framework of the Lisbon Treaty, which sets out the fundamental principles on which the European Union has decided to build and shape its future.

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Does good corporate governance include employee representation? Evidence from German corporate boards

Cited by 309 publications

References 50 publications

Financial Disclosure and the Board: A Case for Non-Independent Directors

Financial Disclosure and the Board: A Case for Non-Independent Directors

Stakeholder Capitalism, Corporate Governance and Firm Value

The Politics of Fair Value Reporting and the Governance of the Standards-Setting Process: Critical Issues and Pitfalls from a European Perspective

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