Product Market Competition, Corporate Governance, and Firm Performance: An Empirical Analysis for Germany

34 Pages Posted: 14 Aug 2001

See all articles by Silke Januszewski Forbes

Silke Januszewski Forbes

Tufts University

Jens F. Koke

Allianz Group

Joachim K. Winter

Ludwig Maximilian University of Munich (LMU); CESifo (Center for Economic Studies and Ifo Institute); Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA); Deutsche Bundesbank - Research Department

Date Written: July 2001

Abstract

This study examines the impact of product market competition and corporate governance on productivity growth in German manufacturing. Using a panel of almost 500 firms over the years 1986--94, we find that firms experience higher productivity growth when operating in markets with intense competition. Similarly, productivity growth is higher for firms under control of a strong ultimate owner, but not when the ultimate owner is a financial institution (a group that consisted almost exclusively of German banks and insurance firms in our sample period). Our results also indicate that competition and tight control are complements: The positive effect of competition is enhanced by the presence of a strong ultimate owner.

Keywords: competition, corporate governance, productivity

JEL Classification: D24, D43, G32

Suggested Citation

Forbes, Silke Januszewski and Koke, Jens F. and Winter, Joachim K., Product Market Competition, Corporate Governance, and Firm Performance: An Empirical Analysis for Germany (July 2001). Available at SSRN: https://ssrn.com/abstract=278275 or http://dx.doi.org/10.2139/ssrn.278275

Silke Januszewski Forbes

Tufts University ( email )

8 Upper Campus Road
Braker Hall
Medford, MA 02155
United States

Jens F. Koke

Allianz Group ( email )

Denmark

Joachim K. Winter (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

Deutsche Bundesbank - Research Department ( email )

PO Box 10 06 02
D60006 Frankfurt
Germany

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