Ownership structure and firm performance: Evidence from German companies during and after the financial crisis of 2008-2011

• Autor(a) principal: Santos, Ana Rita da Silva Portugal dos
• Data de Publicação: 2019
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/19556
• topic: Corporate governance; Ownership; Financial crisis; Germany; Governação corporativa; Estrutura accionista; Crise financeira -- 2008; Alemanha; Gestão de empresas; Governança; Acionista -- Shareholder; Performance

While the world is still recovering from the effects of the latest financial crisis, the threat of another one wanders again over economies. Many have attributed the causes of the financial crisis of 2008 to wrong corporate governance practices, especially excessive risk taking and bad monitoring. One of the corporate governance mechanisms which should prevent such events is ownership structure, as shareholders’ duty is to protect the company’s activity in order for it to prevail and satisfy their interests. Germany’s peculiar corporate governance model has been long studied in an attempt to understand whether its characteristics ensure better corporate performance or not. Using a sample of 250 firms from 2007 to 2016, the present study aims to understand the impact that different shareholder types (i.e. insiders, institutional and family) had on firm performance during and after the financial crisis. Through an econometric analysis, one can conclude that family shareholders present a positive impact on performance during both periods, aligned with their long-term view of the business. Institutional shareholders have a negative impact on performance during the periods in analysis, given their focus on return maximization and not in assisting the company on sustaining market downturns. Contrarily, insiders have impacted performance positively during the crisis, but negatively after it. These non-linear results confirm the inherent effect of entrenchment as, in times of crisis, insiders attempt to improve company’s performance, however afterwards they seek rewards for their efforts, leading to agency problems.