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Dynamic Efficiency of Supervisory Board Codetermination in Germany

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  • Simon Renaud

Abstract

. The aim of this paper is to consider the implications of structural changes, e.g. changing skill composition of the labour force, on the economic advantages and disadvantages of supervisory board codetermination in Germany. Theoretical considerations and an overview of the empirical literature on supervisory board codetermination are given in the first section of the paper. The second section deals with the empirical evidence of the theoretical effects. The basic idea is to compare the long‐term differences in productivity and profitability of companies with quasi‐parity codetermination to companies that are only obliged to give one‐third of their supervisory board seats to labour representatives. Interestingly, the switch from one‐third to parity codetermination seems to increase both productivity and profits. In the longer term, the productivity effect does not seem to change, whereas the profit effect shows an improving path.

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  • Simon Renaud, 2007. "Dynamic Efficiency of Supervisory Board Codetermination in Germany," LABOUR, CEIS, vol. 21(4‐5), pages 689-712, December.
    • Handle: RePEc:bla:labour:v:21:y:2007:i:4-5:p:689-712
    DOI: 10.1111/j.1467-9914.2007.00387.x
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    Cited by:

    1. John T. Addison & Claus Schnabel, 2011. "Worker Directors: A German Product that Did Not Export?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(2), pages 354-374, April.
    2. Aleksandra Gregorič & Thomas Poulsen, 2020. "When Do Employees Choose to Be Represented on the Board of Directors? Empirical Analysis of Board‐Level Employee Representation in Denmark," British Journal of Industrial Relations, London School of Economics, vol. 58(2), pages 241-272, June.
    3. Forcillo, Donato, 2017. "Codetermination: the Presence of Workers on the Board. A Depth Analysis," MPRA Paper 81936, University Library of Munich, Germany.
    4. Balsmeier, Benjamin & Bermig, Andreas & Dilger, Alexander, 2013. "Corporate governance and employee power in the boardroom: An applied game theoretic analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 91(C), pages 51-74.
    5. Sebastian Troch, 2009. "Drittelbeteiligung im Aufsichtsrat - Gesetzliche Regelung versus Unternehmenspraxis Ausmaß und Bestimmungsgründe der Umgehung des Drittelbeteiligungsgesetzes in Industrieunternehmen," Working Paper Series in Economics 128, University of Lüneburg, Institute of Economics.
    6. Gregorič, Aleksandra, 2022. "Board-level worker representation," GLO Discussion Paper Series 1136, Global Labor Organization (GLO).
    7. Joachim Wagner, 2011. "One-third Codetermination at Company Supervisory Boards and Firm Performance in German Manufacturing Industries: First Direct Evidence from a New Type of Enterprise Data," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 131(1), pages 91-106.
    8. Anke Hammen, 2008. "Fachliche Zusammensetzung von Bildungsportfolios: Empirische Analyse eines Risk-Return Trade-Offs," IAAEG Discussion Papers until 2011 200802, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    9. Boneberg Franziska, 2011. "The Economic Consequences of One-third Co-determination in German Supervisory Boards: First Evidence for the Service Sector from a New Source of Enterprise Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(3), pages 440-457, June.
    10. Uwe Jirjahn, 2012. "Non-union worker representation and the closure of establishments: German evidence on the role of moderating factors," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 33(1), pages 5-27, February.
    11. Vitols, Sigurt, 2009. "Beteiligung der Arbeitnehmervertreter in Aufsichtsratsausschüssen: Auswirkungen auf Unternehmensperformanz und Vorstandsvergütung," Arbeitspapiere 163, Hans-Böckler-Stiftung, Düsseldorf.
    12. Rapp, Marc Steffen & Wolff, Michael & Hennig, Jan C. & Udoieva, Iuliia, 2019. "Mitbestimmung im Aufsichtsrat und ihre Wirkung auf die Unterenhmensführung: Eine empirische Analyse vor dem Hintergrund der Finanz- und Wirtschaftskrise," Study / edition der Hans-Böckler-Stiftung, Hans-Böckler-Stiftung, Düsseldorf, volume 127, number 424, March.
    13. Kerstin Lopatta & Katarina Böttcher & Sumit K. Lodhia & Sebastian A. Tideman, 2020. "Parity codetermination at the board level and labor investment efficiency: evidence on German listed firms," Journal of Business Economics, Springer, vol. 90(1), pages 57-108, February.
    14. Kerstin Lopatta & Katarina Böttcher & Reemda Jaeschke, 2018. "When labor representatives join supervisory boards: empirical evidence of the relationship between the change to parity codetermination and working capital and operating cash flows," Journal of Business Economics, Springer, vol. 88(1), pages 1-39, January.
    15. Mark Harcourt & Helen Lam & Richard Croucher, 2015. "The right-to-manage default rule," Industrial Relations Journal, Wiley Blackwell, vol. 46(3), pages 222-235, May.
    16. Njoya, W., 2010. "Employee Ownership in the European Company: Reflexive Law, Reincorporation and Escaping Codetermination," Working Papers wp416, Centre for Business Research, University of Cambridge.
    17. Belot, François & Waxin, Timothée, 2022. "Mandatory employee board representation: Good news for family firms?," International Review of Law and Economics, Elsevier, vol. 71(C).
    18. Franziska Boneberg, 2010. "The Economic Consequences of one-third Codetermination in German Supervisory Boards: First Evidence for the Service Sector from a New Source of Enterprise Data," Working Paper Series in Economics 177, University of Lüneburg, Institute of Economics.
    19. Lars Hornuf & Abdulkadir Mohamed & Armin Schwienbacher, 2019. "The Economic Impact of Forming a European Company," Journal of Common Market Studies, Wiley Blackwell, vol. 57(4), pages 659-674, July.
    20. Marc Goergen & Miguel Manjon & Luc Renneboog, 2008. "Is the German system of corporate governance converging towards the Anglo-American model?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 12(1), pages 37-71, March.
    21. Dorothee Feils & Manzur Rahman & Florin Şabac, 2018. "Corporate Governance Systems Diversity: A Coasian Perspective on Stakeholder Rights," Journal of Business Ethics, Springer, vol. 150(2), pages 451-466, June.
    22. Stefan Petry, 2018. "Mandatory Worker Representation on the Board and Its Effect on Shareholder Wealth," Financial Management, Financial Management Association International, vol. 47(1), pages 25-54, March.
    23. Höpner, Martin & Müllenborn, Tim, 2010. "Mitbestimmung im Unternehmensvergleich: Ein Konzept zur Messung des Einflusspotenzials der Arbeitnehmervertreter im mitbestimmten Aufsichtsrat," MPIfG Discussion Paper 10/3, Max Planck Institute for the Study of Societies.

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