The most influential theory of corporate governance, principal agency theory, does not take into consideration that the key task of modern corporations is to generate and transfer firm-specific knowledge. It proposes that, in order to overcome the widespread corporate scandals, the interests of...

We examine the effect of competition shocks induced by major industry-level tariff cuts on forced CEO turnover. Both the likelihood of forced CEO turnover and its sensitivity to performance increase, particularly for firms with low productivity and high default risk. While CEO's incentive pay...

This paper investigates the role external advice plays in the board's determination of CEO compensation. We show that CEO incentive pay increases with the degree of compensation consultant independence using a quasi-natural experiment provided by the creation of an independent consultant after...

Recent proposals for a more inclusive capitalism call for labor and minority representation in corporate governance. We examine the joint promise of labor and minority representation in the context of German works councils. The councils are a powerful form of labor representation that grants...

We estimate the effects of a mandate allocating a third of corporate board seats to workers (shared governance). We study a reform in Germany that abruptly abolished this mandate for new firm cohorts but locked it in for incumbents. Rejecting the canonical hold-up prediction - that increasing...

Von Pfadabhängigkeit wird gesprochen, wenn Entscheidungen in der Vergangenheit die Handlungsoptionen heute beeinflussen oder sie sogar einengen. Der am Wissenschaftszentrum Berlin für Sozialforschung entwickelte Mitbestimmungsindex (MBix) analysiert anhand von sechs Indikatoren die...

In the varieties of capitalism literature, Germany is understood as a monolithic model of a coordinated market economy. This analysis shows how institutions for configuring capital and labour at the national level are implemented at state and regional level. By focussing on the labour side this...

The paper examines the issue of corporate social responsibility (CSR)from the perspective of constitutional economics, focusing on the distinction betweena political community’s constitutional choice of the rules of the ‘‘marketgame,’’ and the market players’ sub-constitutional...

The discussion about employee representation on supervisory boards has received much attention from scholars and politicians around the world. We provide new insights to this ongoing debate by employing power indices from game theory to examine the "real" power of employees on boards and its...

This paper focuses on the links between labor market institutions and offshoring, with specific reference to the role of codetermination in shaping the international operations of German firms. We use case studies to illustrate how works councils deal with three important aspects of offshoring...