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

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

Tilburg University - Department of Finance

Multiple version iconThere 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

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

Ingolf Dittmann

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
+31 10 4081283 (Phone)
+31 10 4089165 (Fax)

HOME PAGE: http://people.few.eur.nl/dittmann/

Tinbergen Institute

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Ernst G. Maug (Contact Author)

University of Mannheim Business School ( email )

L9, 1-2
Mannheim, 68131
Germany
+49 621 181-1952 (Phone)

HOME PAGE: http://cf.bwl.uni-mannheim.de/de/people/maug/

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Christoph Schneider

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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