Empirical Evidence and Value Effects
IV. Weak Shareholder Rights? – A Case Study of Cevian Capital’s Investment in Demag Cranes AG
Abstract Activist shareholders Cevian Capital and Centaurus Capital played an important role in the takeover of Demag Cranes AG by U.S. rival Terex Corporation. This was possible through supervisory board representation and through publicly urg- ing Demag to start merger talks. The Demag case shows that the German corpo- rate governance system and minority shareholder rights are well-developed. It also serves as empirical evidence and that small shareholders actively participate in corporate governance. An overview of cases where seats on the supervisory board of German stock corporations have been obtained through minority share- holders is presented. This evidence further supports the strong shareholder rights perspective in Germany. The evidence presented in this study conflicts with the view of Shleifer and Vishny (1997): “Germany (…) has virtually no participa- tion by small investors in the market” and the weak shareholder rights perspec- tive in general. 74 IV.1. Introduction The purpose of this study is to shed light on the topic of small investor participa- tion and shareholder rights in Germany. Shleifer and Vishny (1997) in their sur- vey of corporate governance around the world argue that “Germany (…) has virtually no participation by small investors in the market”. Is this true? The case study evidence presented in this analysis substantially challenges this view. Minority shareholder rights in Germany appear to be strong and small share- holders do participate in corporate governance. Differences between the German corporate governance system and its U.S. counterpart will be highlighted throughout this study as this is vital for...
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