The German system of corporate governance: Characteristics and changes

As Germany enters the 21st century, the traditional system of corporate governance, often referred to as “Deutschland AG”, has come under intense pressure to change. This report seeks to analyze the recent dynamics of the system to assess the extent to which they have already led to an erosion of the traditional characteristics. Many of the distinct features of the German system have shown strong resilience despite the pressure for change, while other features seem to have unraveled quickly. The areas in which these changes appeared to have emerged most profoundly and quickly are in the role of banks and in the role of financial markets. Germany is often cited as a classical case of “non-shareholder value orientation”, whose production-oriented, long-term, risk adverse and consensus-driven values have often been contrasted with the “Anglo-Saxon” approach. The forces currently driving the German political economy towards a shareholder-value orientation can be summarized as follows: State measures to deregulate financial markets; pressure of managers of investments funds and pension funds, in particular from the USA; responses to product-market changes and the internationalization of production. These factors have had an input on all three pillars of the traditional German system: 1. The dominant role of the banks in a complex system of cross-shareholding and in company financing; 2. the system of industrial co-determination; 3. the production- centered, company-centered management system. But the developments are still recent and ambiguous. The question is whether these forces will initiate major and permanent change in the operating principles of the German system or whether they will be superseded by the system’s traditional logic. Our report explores these issues in a preliminary way at a point of time when it is not possible to provide a definite answer to what these changes portend. -- Mit dem Übergang in das 21. Jahrhundert gerät das traditionelle deutsche System der Corporate Governance – oft als „Deutschland AG“ bezeichnet – unter starken Veränderungsdruck. Die vorliegende Untersuchung beschreibt die gegenwärtigen Veränderungstendenzen und analysiert, inwieweit diese bereits zu einer Erosion des traditionellen Systems geführt haben. Einige der Besonderheiten des deutschen Systems haben sich – so wird in der Studie gezeigt – als außerordentlich veränderungsresistent erwiesen, bei anderen Merkmalen zeigt sich ein rascher Auflösungsprozess. Die stärksten Veränderungen sind hinsichtlich der Rolle der Banken sowie der Finanzmärkte zu verzeichnen. Deutschland wird oft als klassischer Fall einer Nicht-Shareholder-Value-Orientierung angeführt, das mit seiner Langfristorientierung und Risikoaversion, seiner Produktionszentriertheit und Konsensorientierung ein Gegenmodell zum angelsächsischen Ansatz darstellt. Die wichtigsten Triebkräfte für Veränderungen des deutschen Modells hin zu einer Shareholder-Value-Orientierung sind zum einen staatliche Maßnahmen zur Deregulierung der Finanzmärkte, Druck von Seiten internationaler Investment- und Pensionsfonds, insbesondere aus den USA, sowie Reaktionen auf die Entwicklungen auf den Produktmärkten und die Globalisierung. Auswirkungen dieses Veränderungsdrucks lassen sich für jede der drei tragenden Säulen des traditionellen deutschen Systems feststellen: 1. die Rolle der Banken im Rahmen eines komplexen Systems der Eigentumsverflechtungen und Unternehmensfinanzierung; 2. das System der Mitbestimmung und 3. die Produktions- und Unternehmenszentrierung des leitenden Managements. Allerdings handelt es sich um recht neue und in ihrer Wirkung kaum abschätzbare Entwicklungen. Die Frage, inwieweit sie zu einem grundlegenden Wandel des deutschen Systems der Corporate Governance führen, muss daher zum gegenwärtigen Zeitpunkt offen bleiben.

Constraints on CP-violating Higgs couplings to the third generation

Discovering CP-violating effects in the Higgs sector would constitute an indisputable sign of physics beyond the Standard Model. We derive constraints on the CP-violating Higgs-boson couplings to top and bottom quarks as well as to tau leptons from low-energy bounds on electric dipole moments, resumming large logarithms when necessary. The present and future projections of the sensitivities and comparisons with the LHC constraints are provided. Non-trivial constraints are possible in the future, even if the Higgs boson only couples to the third-generation fermions.Comment: 26 pages, 10 figures; typos corrected, version as published in JHE

What makes the Difference between Unsuccessful and Successful Firms in the German Mechanical Engineering Industry?

Against a background of rising costs and increasing competition, it is besoming more and more difficult for the small and medium-sized firms of the German mechanical engineering industry to be economically successful. The thesis that rapidly changing markets, products and production processes cause serious economic problems for these firms is, however, a proposition on an average trend. A substantial number of firms are not only capable of coping with these conditions and challenges, but are even able to expand their business activities, including employment. We may hypothesize that their product and market strategies as well as their internal mode of operation and organization differs significantly from those firms doing economically less well. In order to test the significance of factors which could lead to different levels of success, operationalized with data of the NIFA panel the method of static microsimulation is applied using the program MICSIM. This particular method offers the possibility of reweighting the information contained in micro datasets according to restrictions given by aggregated data (i.e. marginal distributions). The latter will be chosen in such a way that the number of firms with properties (strategies), hypothetically leading to success in terms of lower excess capacity, are 'artificially', increased in the sample. The research goal is to find out whether such hypothetical strategies are supported by the data. The basic finding that certain complex strategies are more often successful demonstrates that unidimensional approaches to modernize production are of less value. Only in those strategies wehere organization of production, technical equipment, degree of vertical integration, products and customers are part of an intergrated innovational strategy, is success most likely to be fuelled.economic succes, NIFA PANEL, microsimulation, engineering

Coulomb effects on electromagnetic pair production in ultrarelativistic heavy-ion collisions

We calculate the asymptotic high-energy amplitude for electrons scattering at one ion, as well as at two colliding ions, by means of perturbation theory. We show that the interaction with one ion eikonalizes and that the interaction with two ions causally decouples. We are able to put previous results on perturbative grounds and propose further applications for the obtained rules for interactions on the light cone. We discuss the implications of the eikonal amplitude on the pair production probability in ultrarelativistic peripheral heavy-ion collisions. In this context the Weizsäcker-Williams method is shown to be exact in the ultrarelativistic limit, irrespective of the produced particles’ mass. A new equivalent single-photon distribution is derived, which correctly accounts for Coulomb distortions. The impact on single-photon induced processes is discussed