Empirical Evidence and Value Effects
III.Activist Shareholders, Abnormal Returns, and the German Aufsichtsrat
Abstract This event study finds significant, positive abnormal returns associated with stake-building by activist shareholders similar to those found in U.S. studies. I study the fixed term nature of the German supervisory board appointment hy- pothesizing that the timing of the upcoming election has an impact on the credi- bility of the activist effort. More credible approaches should consequently be associated with higher abnormal returns. An average abnormal return that is up to 6.9 percent higher can be earned in the [0; +5] event window when consider- ing the timing of the next supervisory board election. Capital markets apparently perceive an activist effort within one to two years prior to the election as being most credible. Quite contrary to intuition the highest post-announcement abnor- mal returns can then be achieved with a comparably low stake. Talking about the credibility of the activist effort it seems that high cash positions on targets’ balance sheets have a negative impact on the post-announcement abnormal re- turn. 52 III.1. Introduction Studies of German corporate governance focus on share ownership concentra- tion (Franks and Mayer, 2001), large blockholders (Becht and Boehmer, 2003) and founding-family ownership (Andres, 2008), emphasizing the importance and influence of German banks ((Franks and Mayer, 1998), (Köke, 2004), (Heiss and Köke, 2004)). The influence of banks, however, has decreased in the past two decades ((Vitols, 2005), (Dittmann et al., 2010)) while regulatory ini- tiatives have further increased accountability and transparency in corporate Germany ((Nowak, 2004), (Goergen et al., 2008)). Hackethal,...
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