Working Paper: CEPR ID: DP2898
Authors: Julian R. Franks; Colin Mayer
Abstract: In a study of the ownership of German corporations, we find a strong relation between board turnover and corporate performance, little association between concentrations of ownership with managerial disciplining and only limited evidence that pyramid structures can be used for control purposes. The static relation of ownership to control in Germany is therefore similar to the UK and US. There are, however, marked differences in dynamic relations involving transfers of ownership. There is an active market in share blocks giving rise to changes in control, but the gains are limited and accrue solely to the holders of large blocks, not to minority investors. We provide evidence of low overall benefits from control changes and the exploitation of private benefits of control.
Keywords: bank control; board turnover; control; ownership; pyramiding; takeovers
JEL Codes: G32; G34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| board turnover (J63) | corporate performance (G38) |
| poor performance (D29) | board turnover (J63) |
| ownership concentration (G32) | governance responsiveness (G38) |
| management board turnover (G34) | ownership concentration (G32) |
| ownership changes (G32) | benefits for minority shareholders (G34) |
| concentrated ownership (G34) | corporate efficiency (G30) |
| ownership patterns (R21) | forms of control (E61) |