Corporate Governance in Transition: Ten Empirical Findings on Shareholder Value and Industrial Relations in Germany

Max-Planck-Institute for the Study of Societies Working Paper No. 05/2001

61 Pages Posted: 19 Oct 2001

See all articles by Martin Höpner

Martin Höpner

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for the Study of Societies

Date Written: October 2001

Abstract

Within the context of debates over national "varieties" of capitalism, this paper discusses the shareholder value orientation of the 40 largest listed German companies. Three dimensions of shareholder value are distinguished: the communicative dimension, the operative dimension and the dimension of managerial compensation. A shareholder value index compiling data on accounting, investor relations, variable top-management compensation and the implementation of profitability goals makes it possible to compare the shareholder orientations of the companies. The shareholder value phenomenon is explained first by the exposure to markets - the international product market, capital market pressures and the market for corporate control - and, secondly, by internal developments - changing management careers, increasing management compensation and reduced monitoring by banks and corporate networks - which cause external impulses to increase shareholder value to fall on fertile ground. Conflicts over shareholder orientation result in changing coalitions between shareholders, management, and employees. Shareholder value does not make companies opt out central collective agreements or endanger the existence of employees' codetermination, but it does lead to more market-driven industrial relations.

Keywords: Corporate Governance, Shareholder Value, Industrial Relations, Varieties of Capitalism, Co-Determination, Political Economy, Germany

JEL Classification: G3, J5, L2, P5

Suggested Citation

Höpner, Martin, Corporate Governance in Transition: Ten Empirical Findings on Shareholder Value and Industrial Relations in Germany (October 2001). Max-Planck-Institute for the Study of Societies Working Paper No. 05/2001. Available at SSRN: https://ssrn.com/abstract=287460 or http://dx.doi.org/10.2139/ssrn.287460

Martin Höpner (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for the Study of Societies ( email )

Paulstr. 3
50676 Koln
Germany

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