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This paper aims to address the evolution of corporate governance in Germany with a particular regard to whether there can be observed a gradual convergence to a shareholder primacy corporate governance system.

To investigate a potential shift of the German corporate governance system to an Anglo-American tiled corporate governance system, the authors have empirically assessed on a polynomial base 52 separate company and corporate governance variables for 20 years (1995-2014).

This research suggests that a gradual convergence has taken place prior to the global financial crisis. However, the results suggest that the convergence process experienced a slowdown in the aftermath of the global financial crisis, which may be linked to the stability of the German corporate governance system during the global financial crisis and the political environment during this time.

This paper contributes to the research by not only analysing the development of the German corporate governance system but also identifying new reasons for this development and explaining why a new convergence process may be observed in the future again.

The aim of this study is to apply the concept of social norm dynamics to explain how corporate governance soft law is enforced.

Using data of German listed stock companies and of economic media coverage between 2001 and 2010, the authors observe the complex relationship between sanctions and behavior in the social context of corporate governance soft law.

The authors find the public discussion of normative demands related to corporate governance issues increases if firms do not comply with the German Corporate Governance Code. The authors show that groups of actors, such as DAX companies, represent the addressees of normative demands, i.e. targets of expectations about what is appropriate and what is not. The authors also find that normative demands tend to be personalized, as public discussion is greater when initiated by a specific individual or firm. Finally, the authors demonstrate that social control in terms of public sanctioning positively influences a firm’s compliance with the soft law whereby negative statements (disapproval) outweigh the effects of positive statements (approval).

We corroborate the social character of normative demands in the context of corporate governance soft law, and contribute to a better understanding of why soft law can work, despite it having no legally binding force. The results of our study suggest that sanction mechanisms in the context of social norms underpin the strength of soft law as an alternative to, or extension of, hard law.

The purpose of this paper is to provide an outline of German corporate governance.

The history of the German Corporate Governance Code is highlighted. Then a short overview of the acceptance of the code by companies in practice is given which is based on an empirical survey. This is followed by the most recent changes as well as an overview of the developments of corporate governance in Europe. Finally, a summary of the current discussion of codetermination in terms of company management in Germany is provided.

This appraisal, accompanied by a high degree of approval of the code, shows that, on the one hand, its stipulations partly break with tradition and, on the other hand, have undergone frequent changes: in a period of four years, already four amendments have been made.

The paper offers insight into issues of corporate governance in Germany.

The purpose of this paper is to provide an overview of corporate governance structures in the UK and Germany addressing the extent to which corporate governance structures may have been a contributory factor to the recent banking crisis. Following a review of shareholder and stakeholder theories of corporate governance and a comparative overview of corporate governance codes in the UK and Germany, the authors aim to provide some country level macroeconomic data and performance related data for a small number of large banks in the UK and Germany.

The paper is structured as follows. It first reviews the existing literature that underpins the stakeholder vs shareholder debate within corporate governance. It then reviews the current codes of conduct and governance structures implemented by UK and German banks. An analysis of the extent to which the banking crises can be attributed to failures in governance is presented and finally some conclusions and recommendations are outlined.

Findings suggest that while corporate governance in banks would appear to have been a significant factor in the recent banking crisis, based on the performance data, it cannot be said that a corporate governance approach based on either shareholder capitalism (UK) or stakeholder capitalism (Germany) is more at fault than the other. However, it is clear that UK and German corporate governance structures were not adequate to prevent the recent banking crisis and only time will tell whether the remedial actions taken have been sufficient. The present findings, in line with those presented in the Walker report in 2009, suggest that the codes of conduct in both countries were not adequate to deal with the complex issues caused by the financial crisis and that changes need to be implemented. The authors fully acknowledge that corporate governance only played a part in the financial crisis and in order to try to stop a repeat of this, the whole regulatory environment in both countries needs to be strengthened.

The main limitation of the study lies with a lack of complex analysis undertaken to support the findings.

The findings from the study suggest that, regardless of the type of governance in operation, current corporate governance rules were not adequate and that a new set of rules is needed in both the UK and Germany. The findings also suggest that the stakeholder/shareholder debate may not be as important as previously claimed and that regulators need to find good governance rules, regardless of theoretical underpinnings.

Governments across the world are currently cutting public spending in an extreme fashion and this is, partly, due to the banking crises. Therefore, poor governance in the banking sector is leading to massive social problems in the real world as governments cut services.

The paper is original as it is the first attempt to discuss the corporate governance failing and the banking crises from a shareholder/stakeholder perspective.

This paper aims to provide insight whether disclosed compliance with the German Corporate Governance Code (GCGC) leads to higher valuation on the German stock market.

Based on agency theory, stakeholder theory and institutional theory, the authors conduct a meta-analysis and evaluate the value relevance of the compliance with the GCGC.

The research finds that compliance with the GCGC is mainly not a value-relevant factor for German companies listed at the Frankfurt Stock Exchange.

The research considered is not fully comparable with regard to observation date, full integration of the GCGC rules and company selection/sample size. Future research is encouraged to research the valuation effects of compliance with the GCGC for a longer time horizon, the use of uniform performance measures and the integration of all GCGC rules.

Compliance with the GCGC has not proven to be a value-driver for German listed companies. The authors recommend companies to search for opportunities to make their corporate governance more comprehensive by expanding their corporate governance reporting and thus providing deeper insights on how their processes of management and control work.

The paper is the first investigation integrating the results of ten years of “code compliance – market valuation” research in Germany. We detect reasons why soft law regulation by corporate governance codes did not function on the German stock market. We additionally address behavioral aspects why investors do not give enough relevance to companies’ corporate governance statements so far.

This study aims to examine the effects of competing influences emanating from firms’ social structural context (i.e. sent and received board of director interlocks and industry peers) on the adoption of an institutionally contested corporate governance code provision.

The corporate governance code provision of interest in this research recommends that German firms listed on German stock exchanges should disclose the individual remuneration arrangements for their board members. This paper uses 945 firm year observations from 2002 to 2006, the time period during which the adoption of this provision was voluntary for firms, to examine the role of firms’ social structural context in the legitimization process of this provision.

The results show that sent board interlocks to firms that defy pressures to adopt this practice have an equally pronounced but opposing effect on its institutionalization process. Received interlocks are inconsequential in this process. The results also provide evidence for the existence of competing influences emanating from firms’ industry peers. In contrast to the effects associated with sent board interlocks, at the industry level, peer acquiescence has a more pronounced effect than peer defiance. Furthermore, the practice’s legitimacy among firms’ peers moderates the effects of sent board interlocks.

The results of this paper suggest that a balanced approach to studying institutional change in corporate governance needs to acknowledge the co-existence of conflicting signals regarding the spread of new institutional models. The findings suggest that firms’ social structural context plays a central role in processes of contested institutional change. Board interlocks and industry peers carry the potential to facilitate institutional change and facilitate institutional continuity and resistance to change. However, not all board interlocks are of equal importance, and industry peers constitute a source of legitimacy to which directors forming the interlocks attend.

Poland along with other members of the transition economies of Central and Eastern Europe (CEE) have adopted a hybrid corporate governance model, which draws inspirations from both the insider‐oriented system as exemplified in Germany and the outsider‐oriented system as exemplified in the UK. The paper aims to examine the effectiveness of the transplantation process in Poland.

The paper looks at common actual practices prevailing in the country itself and compares this with those in Germany and the UK. The research approach relies on a limited case analysis, drawing data primarily from the public domain.

Poland's hybrid corporate governance system appears to align with the country's socio‐economic‐legal framework and also takes into account the common positive features found in both the insider‐oriented system and the outsider‐oriented system; and in particular the emphasis on transparency and accountability, proper corporate asset management, and investors’ protection safeguards. However, it would appear that the process of corporate governance monitoring and enforcement in Poland may need to be improved. It is also observed that Poland is increasingly looking towards the Anglo‐Saxon model of corporate governance as it developed its own system, largely because of the relatively greater success of the latter, the influence of influential global institutional investors in Continental Europe, and the diminishing influence of the German model, which itself is now contemplating fundamental reforms.

The transition economies of CEE like Poland requires the practice of sound corporate governance to ensure more efficient mobilisation of their economic resources.

The paper shows that good corporate governance should help to attract more foreign investments into transition economies to help accelerate growth and enhance their balance of payments positions; and reduce gradually the extent of state involvement in the business sector.

This paper aims to empirically investigate the relationship between the level of compliance with the German Corporate Governance Code’s (GCGC) recommendations and the implied cost of equity capital (ICC). German listed companies are required by law to annually disclose their compliance with the recommendations of the GCGC. Whether the GCGC achieves its aim to promote the trust of stakeholders in the management and supervision is still an open question.

ICC is regressed on a score that captures compliance with the GCGC and several control variables. The dataset covers the period of 2003-2012 with declarations of compliance from 447 companies. ICC is chosen as an outcome variable, as it captures general investment risk as well as risk arising from asymmetric information and mistrust of investors in management.

The results of the empirical analysis demonstrate that a higher level of GCGC compliance is associated with lower ICC.

It is expected that the results of this study will strengthen acceptance of the GCGC and empirically support the work of the government commission that is responsible for it. It has not been analyzed yet whether the firms cite good reasons why they do not adhere to certain items.

This empirical analysis is the first to provide statistically reliable evidence on how compliance with the GCGC affects ICC and whether the work of the government commission reflects good corporate governance as perceived by capital markets.

The paper seeks to analyze to what extent the contents of corporate governance codes of countries in the European Union are driven by external (internationally accepted corporate governance best practices) or domestic (institutions, culture, etc.) forces.

The paper compares the contents of codes with the priorities set by the European Commission with respect to modernising company law and enhancing corporate governance in the European Union.

The analysis shows that the majority of the codes of the European Union countries are not in full accordance with the priorities of the European Commission. This may reflect that codes are driven by both external and domestic forces. Whether there is a difference between Western European and Central and Eastern European countries in this respect is also investigated, but no difference, at least at the aggregate level of the codes of both groups of countries has been found.

The analysis excludes five (prospective) European Union members. The analysis does not provide a comprehensive overview of domestic determinants of why codes of individual countries diverge from the European Union communication. Future research should systematically explore whether and to what extent domestic forces are indeed determining the contents of codes and, if so, which country‐specific forces have an impact on establishing code contents.

This paper is the first comprehensive attempt to analyse the contents of corporate governance codes. Such an analysis is important to understand the underlying forces that shape the diffusion of codes and their contents.