Bankers on the Boards of German Firms: What They Do, What They are Worth, and Why They are (Still) There

Dittmann, Ingolf; Maug, Ernst G.; Schneider, Christoph

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Bankers on the Boards of German Firms: What They Do, What They are Worth, and Why They are (Still) There

Review of Finance, Vol. 14, No. 1, pp. 35-71, 2010

ECGI - Finance Working Paper No. 196/2008

45 Pages Posted: 3 Mar 2008 Last revised: 11 Feb 2010

See all articles by Ingolf Dittmann

Ingolf Dittmann

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Tinbergen Institute; Erasmus Research Institute of Management (ERIM); European Corporate Governance Institute (ECGI)

Ernst G. Maug

University of Mannheim Business School; European Corporate Governance Institute (ECGI)

Christoph Schneider

University of Münster - Finance Center Münster

There are 2 versions of this paper

Date Written: February 24, 2009

Abstract

We analyze the role of bankers on the boards of German non-financial companies for the period from 1994 to 2005. We find that banks that are represented on a firm's board promote their own business as lenders and as M&A advisors. They also seem to act as financial experts who help firms to obtain funding, especially in difficult times. We find little evidence that bankers monitor management and suggest that bankers on the board cause a decline in the valuations of non-financial firms. Banks' equity ownership declined sharply during our sample period and the German financial system lost some of its formerly distinctive features.

Keywords: Banks, Board of Directors, Corporate Governance, Germany

JEL Classification: G21, G34

Suggested Citation: Suggested Citation

Dittmann, Ingolf and Maug, Ernst G. and Schneider, Christoph, Bankers on the Boards of German Firms: What They Do, What They are Worth, and Why They are (Still) There (February 24, 2009). Review of Finance, Vol. 14, No. 1, pp. 35-71, 2010, ECGI - Finance Working Paper No. 196/2008, Available at SSRN: https://ssrn.com/abstract=1093899