Hostname: page-component-77c89778f8-swr86 Total loading time: 0 Render date: 2024-07-18T20:28:09.308Z Has data issue: false hasContentIssue false
  • English
  • Français

The Impact of Equity Markets on Business Organization: Some Comparative Observations Regarding Differences in the Evolution of Corporate Structures

Published online by Cambridge University Press:  17 February 2009

Friedrich Kübler
Friedrich Kübler
Affiliation:
Professor of Law, University of Pennsylvania, Philadelphia/Professor (emeritus), Johann Wolfgang Goethe-Universität Frankfurt am Main/Attorney (of Counsel), Clifford Chance Pünder, Frankfurt a.M. Assistance by Heath Price Tarbert is gratefully acknowledged.
Get access

Extract

After World War II it became obvious that the American way of allowing an open and highly competitive economy was superior to the traditional German system of concentrated groups of companies, cartels, and regular government interference. For the organization of large firms it was the "Berle-Means" corporation1 which presented itself as the model for reforming German corporate law. In fact, the separation of ownership and control offered considerable advantages. Management functions were awarded on the basis of merit, abandoning the feudal rule of inheritance. Investors were able to reduce risk by diversification. The dispersion of ownership allowed managers to escape the control of banks or other financial institutions, enabling the corporation to become an autonomous player in competitive markets. Management had to serve the interests of all - and not only of big shareholders; it was held accountable by the judicial enforcement of fiduciary duties, the monitoring of independent directors and the emerging market for corporate control. ErnstJoachimMestmäcker had been the first German author to point to this model; in his path-breaking analysis he confronted the American public corporation with the corporatist German structures and suggested far-reaching changes, mostly following the American example.

Type
Research Article
Information
European Business Organization Law Review (EBOR) , Volume 2 , Issue 3-4 , September 2001 , pp. 669 - 683
Copyright
Copyright © T.M.C. Asser Press and the Authors 2001

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Berle, / Means, , The Modern Corporation and Private Property (New York: Commerce Clearing House 1933).Google Scholar

2 For details and references see Roe, , “Some Differences in Corporate Structure in Germany, Japan, and the United States”, 102 Yale L.J. (1927) 1933, at p. 1993Google Scholar. For the impact of this model on comparative corporate law analysis see Rock, , “America's Fascination with German Corporate Governance”, Die Aktiengesellschaft (AG) [1995] 291.Google Scholar

3 Verwaltung, Konzerngewalt und Rechte der Aktionäre. Eine rechtsvergleichende Unter-suchung nach deutschem Aktienrecht und dent Recht der Corporations in den Vereinigten Staaten (Karlsruhe: Müller 1958).Google Scholar

4 See in particular Wiethölter, , Interessen und Organisation der Aktiengesellschaft im ameri-kanischen und deutschen Recht (Karlsruhe: Müller 1961).Google Scholar

5 This had been the official explanation of the bill; see Bundestagsdrucksache IV/71, 93.

6 For details see Assmann, Einleitung, in: Hopt, / Wiedemann, (eds.), Groβkommentar zum AktG, 4th ed. (Berlin: de Gruyter 1992) notes 191-209.Google Scholar

7 Adams, , “Die Usurpation von Aktionärsbefugnissen mittels Ringverflechtung in der ‘Deutschland AG’”, Die Aktiengesellchaft [1994] 148Google Scholar; Adams, , “Crossholdings in Germany”, 155 JITE (1999)80.Google Scholar

8 Mülbert, , “Empfehlen sich gesetzliche Regelungen zur Einschränkung des Einflusses der Kreditinstitute auf Aktiengesellschaften?” Gutachten E zum 61. Deutschen Juristentag (1996) 20 with references.Google Scholar

9 Mülbert, ibid., at pp. 16 et seq.

10 See the figures in Gottschalk, , “Der Stimmrechtseinfluß der Banken in den Aktionärs-versammlungen der Großunternehmen”, WSI-Mitteilungen (1989) 294, 298.Google Scholar

11 Roe, supra n. 2, at pp. 1930 et seq.; Roe, , Strong Managers, Weak Owners: The Political Roots of American Corporate Finance (Princeton, N.J.: Princeton University Press 1997) pp. 94 et seq., 169 et seq.Google Scholar

12 Roe, , “German Codetermination and German Securities Markets”, 5 Col. J. of Eur. L. (1999) 199, 200.Google Scholar

13 Roe, ibid., at p. 201.

14 Roe, ibid., at p. 208.

15 Roe, , Political Preconditions to Separating Ownership from Control: The Incompatibility of the American Public Firm with Social Democracy (Col. Law and Economics Working Paper 1999).Google Scholar

16 For a summary see Kübler, / Schmidt, / Simitis, , Mitbestimmung als gesetzgebungspolitische Aufgabe (Baden-Baden: Nomos 1978) 113 et seq.Google Scholar

17 Roe, supra n. 2, at p. 1970.

18 § 186 par. 3 sentence 4 AktG; for the background see Kübler, / Mendelson, / Mundheim, , “Die Kosten des Bezugsrechts”, Die Aktiengesellschaft [1989] 461Google Scholar; Seibert, / Köster, / Kiem, , Die kleine AG, 3rd ed. (Köln: RWS 1996) fn 182.Google Scholar

19 Pub. L. No. 106-102,113 Stat. 1338 (1999).

20 These similarities have been observed before; see e.g. Roe, supra n. 2, and Buxbaum, , “Institutional Owners and Corporate Managers: An International Perspective”, 57 Brooklyn L. Rev. (1991) 1, 26 et seq.Google Scholar

21 Chandler, Jr., Scale and Scope. The Dynamics of Industrial Capitalism (Cambridge: Belknap 1990) p. 588.Google Scholar

22 Some evidence is referred to by Kropff, , “25 Jahre AktG – was waren die Ziele und was wurde erreicht?” in: Lutter, (ed.) 25 Jahre AktG (Düsseldorf: Das Wertpapier 1991) pp. 19, 20.Google Scholar

23 For figures and references see Kübler, , Gesellschaftsrecht, 5th ed. (Heidelberg: Müller 1998) pp. 160Google Scholar et seq. The lowest point was reached in the late 1970s and early 1980s. In 1979 there were only 2,139 stock corporations left; in 1983 only 442 were listed on one of the German stock exchanges.

24 Deutsche, Bundesbank, “Ertragslage und Finanzierungsverhältnisse der Unternehmen im Jahr 1976”, Monatsberichte der Deutschen Bundesbank (November 1977) pp. 31 et seq.Google Scholar; Kübler, , “Unternehmensstrukturen und Kapitalmarktfunktion”, Die Aktiengesellschaft [1981] 5, at pp. 6 et seq.Google Scholar

25 Jacobi, , “Die Bedeutung der Eigenkapitalbasis im internationalen Vergleich”, in: Bruns, / Häuser, (eds.), Eigenkapital und Kapitalmarkt (Frankfurt a.M.: Knapp 1978) 55, at pp. 58 et seq. and 73.Google Scholar

26 See infra part 3.

27 Before the 1978 tax reform, dividends had to bear the double burden of the corporate and the individual income tax; both were high. Because there was (and is) no tax on capital gains, shareholders in the higher brackets of income taxation were much better off as long as they were not paid dividends but were able to cash in the additional value of their stock. This could be achieved by the sale of preemptive rights.

28 Roughly speaking, it lasted four decades: from the beginning of World War I to the mid 1950s.

29 For details see Manning, / Hanks, , Legal Capital, 3rd ed. (Westbury, NY: Foundation Press 1990)Google Scholar; Kübler, , Aktie, Unternehmensfinanzierung und Kapitalmarkt (Köln: Ges. für Bankwissen-schaftliche Forschung 1989)Google Scholar; Bauer, , Gläubigerschutz durch eine formelle Nennkapitalziffer – Kapitalgesellschaftliche Notwendigkeit oder überholtes Konzept? (Frankfurt a.M.: Lang 1995).Google Scholar

30 From 13 December 1976: OJ(EC) [1977] L 26/1.

31 § 32 paras. 2 and 3 AktG.

32 §§ 52 and 53 AktG. This requirement has been relaxed recently.

33 Bundesgerichtshofin Zivilsachen (BGHZ) 95,330, 337 et seq. (Autokran). Some years later this doctrine was – at least in part – abandoned: BGHZ 122, 123, 129 et seq. (TBB).

34 BGHZ 110, 47, 52 et seq.; BGHZ 113, 335, 340 et seq.; BGHZ 118, 83, 91 et seq.

35 For details see Kübler, , “Institutioneller Gläubigerschutz oder Kapitalmarkttransparenz?” 159 Zeitschrift für das Gesamte Handels- und Wirtschaftsrecht (ZHR) (1995) 550Google Scholar; Walz, , “Strategien zur Überwindung des bilanzrechtlichen Anpassungsbedarfs”, in: Assmann, et al. (eds.), Wirtschafts- und Medienrecht in der offenen Demokratie (Heidelberg: Müller 1997) 557.Google Scholar

36 Unternehmen an sich.

37 The theory is explained and discussed by Mestmäcker, supra n. 3, pp. 14 et seq.; Wiethölter, supra n. 4, pp. 38 et seq.; Zöllner, , Die Schranken mitgliedschaftlicher Stimmrechtsmacht bei den privaten Körperschaften (München: Beck 1963) pp. 70 et seq.Google Scholar

38 Its most obvious expression is the claim for Unternehmensverfassung, a (political) “constitution of the enterprise”; see e.g. Boettcher, / Hax, / Kunz, / von, Nele-Breuning/ Ortlieb, / Preller, , Unternehmensverfassung als gesellschaftspolitische Forderung (Berlin: Duncker & Humblot 1968)Google Scholar; Steinmann, , Das Groβunternehmen im Interessenkonflikt (Stuttgart: Poeschel 1969)Google Scholar; Raiser, Th., Das Unternehmen als Organisation (Berlin: de Gruyter 1969)CrossRefGoogle Scholar; Ott, , Recht und Realität der Unternehmenskorporation (Tübingen: Mohr 1977).Google Scholar

39 For a recent document, see Bertelsmann-Stiftung, /Hans, Böckler-Stiftung (eds.), Mitbestimmung und neue Unternehmenskulturen – Bilanz und Perspektiven. Bericht der Kommission Mitbestimmung (Gütersloh: Berterlsmann-Stiftung 1998).Google Scholar

40 §§76 par. 1, 119 para. 2 AktG.

41 §§76 par. 1, 111 para. 4 AktG.

42 § 84 para. 3 AktG.

41 § 101 para. 1 AktG does not require a qualified majority.

44 §§ 102 para. 1, 103 para. 1 AktG.

45 § 134 para. 1 sentence 2 AktG. The restriction could be introduced by amending the articles of incorporation (BGHZ 70, 117, 121 et seq. (Mannesmann)).

46 Adams, supra n 7.

47 See third form of financing discussed in c) above.

48 Steindorff, , “Einzelfragen zur Reichweite des Mitbestimmungsgesetzes”, 141 ZHR (1977) 457, 464Google Scholar; Kübler/ Schmidt/ Simitis, supra n. 16, pp. 195.

49 Murakami, , Einführung in die Grundlagen des japanischen Rechts (Darmstadt: Wiss. Buchges. 1974) pp. 49 et seq.Google Scholar; Zweigert, / Kotz, , Einführung in die Rechtsvergleichung, 3rd ed. (Tübingen: Mohr 1996) pp. 289 et seq.Google Scholar

50 Zweigert/Kötz, ibid., pp. 292 et seq.; Tanaka, , The Japanese Legal System (Tokyo: University of Tokyo 1976) pp. 2491 et seq.Google Scholar

31 Roe, supra n. 2, p. 1955.

32 Aoki, , Information, Incentives and Bargaining in the Japanese Economy (Cambridge: Cambridge University Press 1988) p. 119.CrossRefGoogle Scholar

33 For a comprehensive description, see Aoki, ibid., pp. 116 et seq.; Gerlach, , Alliance Capitalism. The Social Organization of Japanese Business (Berkeley: University of California Press 1992) pp. 3 et seq.Google Scholar

54 Gilson, / Roe, , “Understanding the Japanese Keiretsu: Overlaps between Corporate Governance and Industrial Organization”, 102 Yale L. J. (1993) 871,879CrossRefGoogle Scholar; Colin, Mayer, “Financial Systems and Corporate Governance: A Review of the International Evidence”, 154 JITE (1998) 144, 154 et seq.Google Scholar; Milhaupt, , Creative Norm Destruction: The Evolution of Non-Legal Rules in Japanese Corporate Governance” (typoscript 2000, on file with author) 149 U. Penn. L. Rev (2001) (forthcoming) p. 4.Google Scholar

55 Gerlach, supra n. 53, at p. 55, assumes that 70 – 75% of the stock of Japanese corporations had been owned by “stable investors”, that it is to say: by the other members of the group.

56 Gilson/ Roe, supra n. 54, pp. 885 et seq.

57 Gilson/ Roe, supra n. 54, pp. 987 et seq.; Miwa, , “The Economics of Corporate Governance in Japan”, in: Hopt, et al. (eds.), Comparative Corporate Governance (Oxford: Clarendon 1998) pp. 877 et seq., 881.Google Scholar

58 See text to n. 47 supra.

59 Gerlach, supra n. 53, p. 116; Roe, supra n. 2, p. 1966 (pointing to the German analogy). There is considerable evidence that groups of companies primarily serve the function of risk sharing in order to compensate for an underdeveloped capital market; see Khanna, / Yafeh, , “Business Groups and Risk Sharing around the World”Google Scholar; Col. L. School Law & Economics Workshop Paper (March 2001).Google Scholar

60 Aoki, supra n. 52, p. 127.

61 Gilson/ Roe, supra n. 54, p. 879; Mayer, supra n. 54, pp. 154 et seq.; Hoshi, , “Japanese Corporate Governance as a System”Google Scholar, in Hopt et al., supra n. 57, 847, 860.

62 Milhaupt, supra n. 54, p. 4 (indicating that from the 1950s to the early 1990s there had been not a single bank failure in Japan.

63 Jacobi, supra n. 25, pp. 55 et seq. and 60.

64 Kester, , Japanese Takeovers: The Global Contest for Corporate Control (Boston: Harvard Business School 1991) p. 197Google Scholar; Gilson/Roe, supra n. 54, p. 880; Hoshi, supra n. 61, p. 172.

65 Gilson, / Roe, , “Lifetime Employment: Labor Peace and the Evolution of Japanese Corporate Governance”, 99 Columbia L. Rev. (1999) 508, 534CrossRefGoogle Scholar; Milhaupt, supra n. 54, p. 6.

66 Roe, supra n. 2, p. 1978; Gerlach, supra n. 53, p. 30.

67 Aoki, supra n. 52, p. 120; Roe, supra n. 2, p. 1943.

68 In Japan, there had been unfriendly takeovers under the zaibatsu system: Milhaupt, supra n. 54, p. 9.

69 This is illustrated by the empirical evidence that German corporations have reduced their costs for capital by switching from German to IAS or US GAAP accounting rules: see Christian, Leuz/ Robert, Verrechia, “The Economic Consequences of Increased Disclosure” (Finance & Accounting Working Paper, Univ. of Frankfurt, No. 40) Journal of Accounting Research (2001) (forthcoming).Google Scholar

70 Walz, supra n. 35, pp. 557 et seq.; Kübler, , “Fragen und Wiinsche des Gesellschafts- und Kapitalmarktrechts an das Recht der Rechnungslegung”, ZGR [2000] 550.Google Scholar

71 See supra n 29.

72 See Heinsius, , “Bezugsrechtsausschluß bei der Schaffung von genehmigtem Kapital”, Festschrift für Kellermann (Berlin: de Gruyter 1991) 115 et seq.Google Scholar; Martens, , “Der Ausschluß des Bezugssrechts”, ZIP [1992] 1677 et seq.Google Scholar; Kübler, , “Sind zwingende Bezugsrechte wirtschaftlich sinnvoll?” ZBB [1993] 1.Google Scholar

73 See Kübler, , “Aufsichtsratsmitbestimmung im Zugwind der Globalisierung”, in: Freundes-gabe für Wulf H. Döser (Baden-Baden: Nomos 1999) 237Google Scholar; Manfred, Weiss, “Zur aktuellen Bedeutung des Mitbestimmungsurteils (BVerfGE 50, 290 ff.)”, KritV [2000] 405.Google Scholar

74 For a comprehensive analysis of the need for further deregulation of German corporate law see Escher-Weingart, , Reform durch Deregulierung im Kapitalgesellschaft (Tübingen: Mohr Siebeck 2001).Google Scholar