Working Paper: CEPR ID: DP1695
Authors: Tim Jenkinson; Alexander Ljungqvist
Abstract: This paper uses clinical evidence to show how the German system of corporate control and governance is both more active and more hostile than has previously been suggested. It provides a complete breakdown of ownership and takeover defence patterns in German listed companies and finds highly fragmented (but not dispersed) ownership in non-majority controlled firms. We document how the accumulation of hostile stakes can be used to gain control of target companies given these ownership patterns. The paper also suggests an important role for banks in helping predators accumulate, and avoid the disclosure of, large stakes.
Keywords: corporate governance; block trades; takeovers; banks; germany
JEL Codes: G32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| accumulation of hostile stakes (D74) | control changes in companies (G34) |
| bank involvement (G21) | success of hostile takeovers (G34) |
| ownership concentration (G32) | ability to mount hostile takeovers (G34) |
| weak protection of minority shareholders (G34) | expropriation of minority interests (H13) |
| expropriation of minority interests (H13) | efficiency of corporate governance (G38) |