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Ringe, Wolf-Georg --- "Changing law and ownership patterns in Germany: corporate governance and the erosion of Deutschland AG" [2015] ELECD 838; in Hill, G. Jennifer; Thomas, S. Randall (eds), "Research Handbook on Shareholder Power" (Edward Elgar Publishing, 2015) 404

Book Title: Research Handbook on Shareholder Power

Editor(s): Hill, G. Jennifer; Thomas, S. Randall

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781782546849

Section: Chapter 19

Section Title: Changing law and ownership patterns in Germany: corporate governance and the erosion of Deutschland AG

Author(s): Ringe, Wolf-Georg

Number of pages: 35

Abstract/Description:

German corporate governance and corporate law are currently undergoing a major change. The old “Deutschland AG”, a nationwide network of firms, banks, and directors, is eroding, ownership is diffusing and the shareholder body is becoming more international than ever. This chapter presents new data to support this development and explores the consequences in governance and in law that have been taken or that need to be drawn from this finding. Consistent with market-based theoretical accounts on corporate law, it finds that the changes currently underway are mainly a response to global market pressure: German banks divested their equity stakes mainly as a consequence of increased international competition. The chapter extends the model of market-led change by two important observations: first, market pressure is not the only driver of legal change, but the law itself in this case contributed to facilitating competition. Notably, a taxation law reform enabled and accelerated the competition process already underway. Legal rules and market competition may thus be understood as not operating in isolation, but as forces that can be working in dialog. Secondly, the chapter highlights the importance of ownership structure as an important intermediate condition in the logical order between market competition and legal change.