The disappearing ‘Deutschland AG’ – an analysis of blockholdings in German large caps

The German corporate governance system changed substantially over the last ten years. Meanwhile, ownership structures of German firms changed significantly. The paper examines the phenomenon of changing ownership structures by studying blockholdings of German large caps between 1997 and 2006. It examines the dynamics of blockholdings by analyzing the evolution of free float and block trades, where at least 5% of voting rights change hands. Two findings emerge. First, the authors find that free float increases from 65% in 1997 to 75% in 2006, mainly caused by German financials and German government entities. Simultaneously, they observe a surprisingly high number of block trades: on average 1.6 block trades per firm from 1997 to 2006. Second, the authors find that particularly individuals and German industrials are guarantors for a stable ownership structure. German financials or German government entities as blockowners increase the free float and the likelihood of block trades. Moreover, block trades are more likely to occur in firms having foreign investors as owners. The findings are of interest with respect to the evolution of the so-called ‘Deutschland AG’ but also with respect to the current anchor shareholder discussion

Der Realoptionsansatz als Controllinginstrument in jungen Wachstumsunternehmen

Auf der Basis des Rationalitätssicherungsansatzes untersucht Kerstin H. Faaß die controllingrelevanten Merkmale von JWU sowie die Anforderungen an ein Controllinginstrument in JWU und nimmt anschließend eine umfassende Kosten- und Nutzenanalyse des Realoptionsansatzes vor. Sie leitet einen Handlungsleitfaden für die stufenweise Anwendung des Ansatzes ab und zeigt Möglichkeiten zur Nutzung des Wertbeitrages des Realoptionsansatzes als Controllinginstrument in JWU auf

Values and corporate responsibility. CSR and sustainable development

In times when numerous scandals have challenged companies’ social legitimacy, CSR might serve as a legitimacy booster. But which is the most effective CSR strategy for improving legitimacy? This study examines how corporate social responsibility activity (CSRA) and corporate social responsibility communication (CSRC) impact legitimacy. The empirical results indicate that neither CSRA nor CSRC has a standalone effect; nonetheless, CSR is important for legitimacy: A CSR strategy that combines high levels of CSRA with low levels of CSRC emerges as the most effective for (re)gaining legitimacy, while an opposite strategy that combines low levels of CSRA with high levels of CSRC emerges as the worst

The effectiveness of combinations of CSR talk and action as strategies for (re)gaining legitimacy

A number of scandals have challenged the social legitimacy of companies. Since corporate social responsibility (CSR) is about the pursuit of public and stakeholder objectives beyond the bottom line, a company's level of commitment to such altruistic aims is reflected in its CSR investments. It follows, then, that companies can use CSR as a vehicle for improving their legitimacy in the eyes of stakeholders and of society in general. Little research exists on the effectiveness of CSR strategies for improving legitimacy. The present study addresses this lacuna by examining how CSR communication and activity impact legitimacy. My results indicate that neither CSR communication nor CSR activity have a stand-alone effect on legitimacy. Nonetheless, CSR is important with respect to legitimacy. CSR strategies consisting of different combinations of talk and action are ranked in order of their legitimacy impact, and then this hypothetical ranking is empirically tested against a sample of German companies. Some hypotheses are confirmed while others are rejected. CSR strategies combining low levels of communication with high levels of CSR action emerge as the most effective for (re)gaining legitimacy, while those combining high levels of communication with low levels of action emerge as the worst in this regard

The impact of commitment to the status quo on managerial discretion

Managerial discretion has been frequently used in management literature to explain why top executives have more or less influence on firms’ success. However, very limited evidence exists on how managerial characteristics shape individual levels of discretion. We empirically analyze how the CEO’s commitment to the status quo (CSQ) affects the personal level of discretion. Our results show that high CSQ reduces the level of managerial discretion. Thus, our study contributes to both the literature on managerial discretion by uncovering rare evidence on its dependence on managerial characteristics and the literature on CSQ by identifying a new dimension of CSQ consequences

Hampering the change: Consequences of the CEO's strategic commitment under managerial discretion

CEOs play a central role for the strategic outcomes of their firms. Although research has provided many insights about the factors determining CEOs' openness toward strategic changes, the consequences of these attitudes have not been sufficiently investigated. To assess the consequences of willingness for change at the CEO level, we used the concepts of Commitment to the Status Quo (CSQ) (i.e., the belief in the enduring correctness of current strategies) and evaluate its effects for strategic persistence under the moderating role of managerial discretion. Our sample is based on 178 publicly traded firms in Germany over 10 years. Our results show that CSQ at the CEO level is crucial for strategic development only in situations of sufficiently high managerial discretion. Namely, a significant impact of the CEO's mental attitude is observable only in scenarios with high product differentiability, high market growth, bad past performance, or small companies

CEO succession and the CEO's commitment to the status quo

Chief executive officer (CEO) commitment to the status quo (CSQ) is expected to play an important role in any firm’s strategic adaptation. CSQ is used often as an explanation for strategic change occurring after CEO succession: new CEOs are expected to reveal a lower CSQ than established CEOs. Although widely accepted in the literature, this relationship remains imputed but unobserved. We address this research gap and analyze whether new CEOs reveal lower CSQ than established CEOs. By analyzing the letters to the shareholders of German HDAX firms, we find empirical support for our hypothesis of a lower CSQ of newly appointed CEOs compared to established CEOs. However, our detailed analyses provide a differentiated picture. We find support for a lower CSQ of successors after a forced CEO turnover compared to successors after a voluntary turnover, which indicates an influence of the mandate for change on the CEO’s CSQ. However, against the widespread assumption, we do not find support for a lower CSQ of outside successors compared to inside successors, which calls for deeper analyses of the insiderness of new CEOs. Further, our supplementary analyses propose a revised tenure effect: the widely assumed relationship of an increase in CSQ when CEO tenure increases might be driven mainly by the event of CEO succession and may not universally and continuously increase over time, pointing to a “window of opportunity” to initiate strategic change shortly after the succession event. By analyzing the relationship between CEO succession and CEO CSQ, our results contribute to the CSQ literature and provide fruitful impulses for the CEO succession literature

Time for future is now - CEO temporal focus and firms' strategic responses to water challenges

This study examines how CEO temporal focus – the extent to which CEOs devotes their attention to the past, present, and future – shapes strategic responses to global grand challenges such as natural resource scarcity. Analyzing water scarcity as one of the global risks of highest concern, we propose that CEO attention to the present and future are critical in addressing the inherent time conflict of managing natural resource scarcity. Using an 11- year panel data set of large- and medium-sized German firms, we find support for our three hypotheses: CEOs who are high in present focus tend to integrate water scarcity in their firm’s strategy only as a pure threat. However, to tackle the grand challenge of water scarcity – in terms of recognizing and implementing valuable water-related business opportunities – they need to be future-oriented. Additionally, we find evidence that future-oriented CEOs shy away from identifying water scarcity as a pure threat without initiating specific mitigating and value-creating strategic actions. These findings contribute to the literature on strategic implications of CEOs’ subjective view of time

Challenging corporate commitment to CSR: Do CEOs keep talking about corporate social responsibility (CSR) issues in times of the global financial crisis?

Purpose In times of crisis, the fundamental principles of companies erode, leading to strategy shifts. This paper aims to examine whether corporate social responsibility (CSR) is on management’s agenda in times of crisis, indicating CSR embeddedness into corporate strategy. The focus is on the four pillars of CSR: social, environment, economy and governance. Design/methodology/approach Starting points are competing hypotheses based on shareholder and stakeholder theory. Chief executive officer (CEO) letters to shareholders of German HDAX firms from 2003 to 2012 are analyzed by means of computer-aided text analysis. Findings The authors find that CEOs talk less about CSR in times of crisis, especially about social and governance issues, indicating that CSR is not fully embedded into corporate strategy, and that, in times of crisis, other aspects gain more importance on management’s agenda

Back to the future: Analyzing the consequences of future orientation on strategic flexibility

Referring to the attention-based view of the firm, our study addresses the relationship between executives' future orientation and strategic flexibility. We examine the impact of the future orientation of top-level managers on two distinct facets of strategic flexibility, specifically strategic flexibility as an ex ante potential and an ex post observable status. Based on panel data for large German companies from 2003 to 2011, we find empirical evidence that a higher level of future orientation leads to higher levels of both types of strategic flexibility. Especially, the influence on the ex post observable type in terms of realized strategic flexibility is highly significant. Thus, we provide additional empirical evidence for three under-researched domains: the consequences of future orientation, the antecedents of strategic flexibility, and the precise distinction of strategic flexibility