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European Corporate Governance Reform and the German Party Paradox. CES Germany & Europe Working Paper no. 03.1, 2003

Hopner, Martin. (2003) European Corporate Governance Reform and the German Party Paradox. CES Germany & Europe Working Paper no. 03.1, 2003. [Working Paper]

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    Abstract

    This paper addresses the current discussion on links between party politics and production regimes. Why do German Social Democrats opt for more corporate governance liberalization than the CDU although, in terms of the distributional outcomes of such reforms, one would expect the situation to be reversed? I divide my analysis into three stages. First, I use the European Parliament’s crucial vote on the European takeover directive in July 2001 as a test case to show that the left-right dimension does indeed matter in corporate governance reform, beside cross-class and cross-party nation-based interests. In a second step, by analyzing the party positions in the main German corporate governance reforms in the 1990s, I show that the SPD and the CDU behave “paradoxically” in the sense that the SPD favored more corporate governance liberalization than the CDU, which protected the institutions of “Rhenish,” “organized” capitalism. This constellation occurred in the discussions on company disclosure, management accountability, the power of banks, network dissolution, and takeover regulation. Third, I offer two explanations for this paradoxical party behavior. The first explanation concerns the historical conversion of ideas. I show that trade unions and Social Democrats favored a high degree of capital organization in the Weimar Republic, but this ideological position was driven in new directions at two watersheds: one in the late 1940s, the other in the late 1950s. My second explanation lies in the importance of conflicts over managerial control, in which both employees and minority shareholders oppose managers, and in which increased shareholder power strengthens the position of works councils.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > competition policy
    Countries > Germany
    EU policies and themes > Policies & related activities > political affairs > political parties
    EU policies and themes > EU institutions & developments > institutional development/policy > historical development of EC (pre-1986)
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Harvard University, Center for European Studies > Program for the Study of Germany and European Working Papers Series
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 20 Aug 2009
    Page Range: p. 33
    Last Modified: 15 Feb 2011 18:00
    URI: http://aei.pitt.edu/id/eprint/9288

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