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Minority Shareholder Monitoring and German Corporate Governance

Empirical Evidence and Value Effects


Christian Thamm

This book comprises three studies on minority shareholder monitoring in Germany. Mandatory disclosure requirements have increased transparency. An analysis of the information that is publicly available is presented, regardless of the size of the target corporation. The second essay in the form of an event study pays special attention to the German supervisory board and its appointment for a fixed term. Capital markets perceive an activist effort as being more credible under certain circumstances. The study as a whole is empirical evidence for increased minority shareholder activity in Germany. The evidence presented supports the strong shareholder rights perspective. It conflicts with the weak shareholder rights view brought forward in the international literature.


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How changes in a firm’s ownership structure influence the corporate governance and, consequently, the corporate valuation has been widely discussed in the fi- nance literature for decades. However, many important questions raised in this discussion remain unanswered today – in particular with regard to active share- holders like single active private investors and hedge funds. The core market for these financial investors is the U.S. market, which is the most mature and well- established market with a long-run history and a large number of very experi- enced market participants. In contrast, the German market is younger and smaller but has been characterized by a strengthening of shareholder rights and a sharp increase in transaction volumes during recent years. Whether empirical evidence for the U.S. market can be transferred to the German institutional set- ting is highly questionable because the political, legal and financial environment in Continental Europe deviates remarkably from the Anglo-Saxon countries. In his thesis, Christian Thamm sets out to analyze whether active investors generate shareholder value when they acquire minority stakes in German corpo- rations and influence the corporate governance. This is not only a remarkable endeavour, as Mr. Thamm uses hand-collected, unique German data to present state-of-the-art analyses, which are competitive and meet highest international standards. The thesis on hand carefully identifies and addresses open research questions related to the shareholder activism in German corporations. Its pri- mary objective was to identify value consequences of shareholder activism and corporate governance changes in Germany analyzing stock price data. Mr....

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