Corporate governance in Germany
| Published date | 27 February 2007 |
| Date | 27 February 2007 |
| DOI | https://doi.org/10.1108/13581980710726778 |
| Pages | 30-41 |
| Author | Rüdiger von Rosen |
| Subject Matter | Accounting & finance |
Corporate governance in
Germany
Ru
¨diger von Rosen
Deutsches Aktieninstitut, Frankfurt, Germany
Abstract
Purpose – The purpose of this paper is to provide an outline of German corporate governance.
Design/methodology/approach – 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.
Findings – 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.
Originality/value – The paper offers insight into issues of corporate governance in Germany.
Keywords Corporate governance, Germany
Paper type Research paper
1. Introduction
The term corporate governance comprises the entirety of all international and na tional
values and principles aimed at good, responsible management of a company . In
Germany, attempts have been made through the German Corporate Governance Code
of February 26, 2002 to provide a regulatory framework for this concept, apart from its
already existing embodiment in the Stock Corporation Act (“Aktiengesetz”), and the
code of Commercial Law (“Handelsgesetz”). Four years since introduction of the
German Corporate Governance Code, it is now certainly the right time to give an
in-depth overall appraisal and to provide answers to the following questions: how was
the code received by the companies affected? How do companies handle
recommendations that are particularly annoying to them? How does the
Government Commission German Corporate Governance Code or the German
Federal Government respond to this? How will the European regulatory system affect
German Corporate Governance in the future? My appraisal will, accompanied by a high
degree of approval of the code, show 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. An important Corpora te
Governance topic which particular ly affects management and supervisi on of
companies in Germany is, however, excluded in th e discussion: manageri al
codetermination (“Mitbestimmung”). It is precisely this issue which is particularly
interesting to non-German investors. Furthermore, the companies are being organised
more and more globally. Around 50 percent of the employees of the 30 DAX companies
are working outside of Germany and thus are not represented in the Supervisory
Boards. Clearly more than 50 percent of turnover and profits have been achieved
abroad, and also the structure of shareholders has changed dramatically: almost
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
JFRC
15,1
30
Journal of Financial Regulation and
Compliance
Vol. 15 No. 1, 2007
pp. 30-41
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581980710726778
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