Universal banking and the performance of German firms

Universal banking and the performance of German firms We empirically investigate the influence of German universal banks on the performance of German firms. We take into account banks’ control rights from equity ownership, banks’ proxy-voting rights, and the concentration of control rights from equity ownership (which includes complex forms such as pyramids, cross-shareholdings, and stocks with multiple votes). We also account for voting restrictions and the German codetermination system (under which employees of large firms have control rights that are unrelated to equity ownership). We find that firm performance improves to the extent that equity control rights are concentrated. Moreover, bank control rights from equity ownership significantly improve firm performance beyond what nonbank blockholders can achieve. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economics Elsevier

Universal banking and the performance of German firms

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Publisher
Elsevier
Copyright
Copyright © 2000 Elsevier Science B.V.
ISSN
0304-405x
DOI
10.1016/S0304-405X(00)00066-0
Publisher site
See Article on Publisher Site

Abstract

We empirically investigate the influence of German universal banks on the performance of German firms. We take into account banks’ control rights from equity ownership, banks’ proxy-voting rights, and the concentration of control rights from equity ownership (which includes complex forms such as pyramids, cross-shareholdings, and stocks with multiple votes). We also account for voting restrictions and the German codetermination system (under which employees of large firms have control rights that are unrelated to equity ownership). We find that firm performance improves to the extent that equity control rights are concentrated. Moreover, bank control rights from equity ownership significantly improve firm performance beyond what nonbank blockholders can achieve.

Journal

Journal of Financial EconomicsElsevier

Published: Jan 1, 2000

References

  • Negotiated block trades and corporate control
    Barclay, M; Holderness, C
  • The structure of corporate ownership
    Demsetz, H; Lehn, K
  • Corporate control, portfolio choice, and the decline of banking
    Gorton, G; Rosen, R
  • Capital choices
    Porter, M

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