FEEM working papers "Note di lavoro" series
1999 .056

Transparency of Ownership and Control in Germany


Authors: Ekkehart Boehmer, Marco Becht
Series: Economy and Society
Editor: Fausto Panunzi
Type: Journal
Keywords: Ownership,Control,Germany
JEL n.: G34,K22,G21
JEL: International Review of Law and Economics
Date: 2003

Abstract

We first analyse legal provisions relating to corporate transparency in Germany. We show that despite the new securities trading law (WpHG) of 1995, the practical efficacy of disclosure regulation is very low. On the one hand, the formation of business groups involving less regulated legal forms as intermediate layers can substantially reduce transparency. On the other hand, the implementation of the law is not practical and not very effective. We illustrate these arguments using several examples of WpHG filings. To illustrate the importance of transparency, we show next that German capital markets are dominated by few large firms accounting for most of the market's capitalisation and trading volume. Moreover, the concentration of control is very high. First, 85% of all officially listed AGs have a dominant shareholder (controlling more than 25% of the voting rights). Second, few large blockholders control several deciding voting blocks in listed corporations, while the majority controls only one block.

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