Does Good Corporate Governance Include Employee Representation? Evidence from German Corporate Boards

35 Pages Posted: 22 Apr 2004

See all articles by Larry Fauver

Larry Fauver

University of Tennessee, Knoxville - Department of Finance; University of Tennessee

Michael E. Fuerst

University of Miami - Department of Finance

Date Written: May 2004

Abstract

Within the German corporate governance system, labor representation on the supervisory board is common and typically legally mandated. Because labor has detailed knowledge of firm operations, we propose that labor representation on corporate boards brings valuable first-hand operational knowledge to corporate board decision-making. We discover that labor representation, through its knowledge of operational detail, provides a powerful means of monitoring and source of information. We show that the judicious use of labor representation increases firm market value and that the greater the need for coordination within the firm, the greater the potential improvement is in governance effectiveness.

Keywords: corporate governance, labor representation, firm value

JEL Classification: G30

Suggested Citation

Fauver, Larry and Fuerst, Michael E., Does Good Corporate Governance Include Employee Representation? Evidence from German Corporate Boards (May 2004). Available at SSRN: https://ssrn.com/abstract=534422 or http://dx.doi.org/10.2139/ssrn.534422

Larry Fauver (Contact Author)

University of Tennessee, Knoxville - Department of Finance ( email )

424 Stokely Management Center
Knoxville, TN 37996
United States

University of Tennessee ( email )

424 Stokely Management Center
Department of Finance
Knoxville, TN 37996-0540
United States
865-974-1722 (Phone)
865-974-1716 (Fax)

Michael E. Fuerst

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
974
Abstract Views
4,474
rank
29,518
PlumX Metrics