Universal Banks, Corporate Control, and Equity Carve-Outs in Germany

Artikel

Universal Banks, Corporate Control, and Equity Carve-Outs in Germany This paper analyzes value effects of changes in the governance structure of German firms due to equity carve-outs. Our main conjecture is that the degree of pre-event corporate control affects market reactions to the announcement of carve-outs. We test two contradictory implications. If less control of management leads to less efficiently managed firms, in particular these firms will benefit the most from a change in the governance structure. On the other hand, if tight control of management ensures a more efficient use of the carve-out proceeds, firms more subject to corporate control will have higher abnormal returns. Our evidence clearly supports the first prediction. We find that a higher degree of pre-event ownership concentration leads to lower abnormal returns. We find evidence consistent with an active role of banks in disciplining management, but this does not go beyond what non-financial blockholders achieve, although we explicitly take into account direct equity stakes, proxy-voting rights, and supervisory board representation of banks. (JEL G21, G32)

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Kredit und Kapital ; ISSN: 1865-5734 ; Volume: 41 ; Year: 2008 ; Issue: 4 ; Pages: 557-587

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Elsas, Ralf ; Löffler, Yvonne
• Event: Veröffentlichung
• (who): Duncker & Humblot
• (where): Berlin
• (when): 2008

Further information

• DOI: doi:10.3790/kuk.41.4.557
• Last update: 10.03.2025, 11:41 AM CET