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Contestants, Profiteers, and the Political Dynamics of MarketizationHow Shareholders gained Control Rights in Britain, Germany, and France$
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Helen Callaghan

Print publication date: 2018

Print ISBN-13: 9780198815020

Published to Oxford Scholarship Online: January 2018

DOI: 10.1093/oso/9780198815020.001.0001

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(p.68) 4 Germany
Contestants, Profiteers, and the Political Dynamics of Marketization

Helen Callaghan

Oxford University Press

The German case illustrates the initially self-reinforcing but ultimately self-undermining effects of market-restraining arrangements. In Germany, a legal framework conducive to bids emerged almost fifty years later than in the UK, partly because, from the nineteenth century onward, German law-makers pursued a bank-based solution to principal–agent problems. Like market-enabling rules, these market-restraining arrangements nurtured their own support base, prominently including the banks. As elsewhere, incumbents also benefited from a divided opposition, and from political arrangements that assured their dominance. In addition, they had symbiotic allies, namely, large universal banks, who benefited from these market restraints for reasons of their own. German universal banks did not grow more numerous with time, but they gradually accumulated politically relevant resources and used these repeatedly to avert or water down market-enabling reforms. Reforms eventually took place nevertheless because the opposition to market restraints also grew stronger—rather than weaker—with time.

Keywords:   Germany, Weimar Republic, corporate governance, company law reform, takeover regulation, universal banks, SPD, CDU, FDP, accounting standards

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