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Book Review - Krahnen/Schmidt, The German Financial System (2004) - Jan Pieter Krahnen and Reinhard H. Schmidt, editors, The German Financial System, Oxford University Press, Oxford, U.K. 2004, ISBN 0-19-925316-1, pp. 550, Price £79.00. Also available at Oxford Scholarship Online.

Published online by Cambridge University Press:  06 March 2019

David C. Donald

Abstract

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Type
Developments
Information
German Law Journal , Volume 6 , Issue 4 , 01 April 2005 , pp. 833 - 844
Copyright
Copyright © 2005 by German Law Journal GbR 

References

1 Information on the Center for Financial Studies and its activities is available at http://www.ifk-cfs.de/English/homepages/h-wiruberuns.htm.Google Scholar

2 Information on the Faculty of Economics and Business Administration is available at http://www.wiwi.uni-frankfurt.de/1.0.html?&L=3.Google Scholar

3 See Bebchuk, Lucian Ayre & Roe, Mark, Path Dependence in Corporate Ownership and Governance, in: Convergence and Persistence in Corporate Governance 69 (Gordon, Jeffrey N. & Roe, Mark, eds. 2004). The essay was originally published in 52 Stan L. Rev. 127 (1999). The 2004 version contains references to newer empirical research.Google Scholar

4 See e.g., Stolleis, Michael, Geschichte des öffentlichen Rechts in Deutschland: Weimarer Republik und Nationalsozialismus 74, 316 (2002).Google Scholar

5 See Mann, Golo, Deutsche Geschichte des 19. und 20. Jahrhunderts 981 (1992)Google Scholar

6 Id., at 248.Google Scholar

7 See Roe, Mark, The Political Determinants of Corporate Governance (2003) and Strong Managers Weak Owners: The Political Roots of American Corporate Finance (1994).Google Scholar

8 See, for example, Kraakman, Reiner R., Davies, Paul, Hansmann, Henry, Hertig, Gérard, Hopt, Klaus J., Kanda, Hideki, and Rock, Edward B., The Anatomy of Corporate Law A Comparative and Functional Approach (2004), and Hopt, Klaus & Wymeersch, Eddy, eds. Comparative Corporate Governance (1997).Google Scholar

9 See, for example, Baums, Theodor & Scott, Kenneth, “Taking Shareholder Protection Seriously? Corporate Governance in the United States and Germany,” Johann Wolfgang Goethe-Universität, Institute for Banking Law, Working Paper No. 119 (2003), available at http://www.jura.uni-frankfurt.de/baums/; Baums, Changing Patterns of Corporate Disclosure in Continental Europe: The Example of Germany, in: Girurisprudenza Commerciale (2003); Baums, Chapter on Germany, in: Shareholder Voting Rights and Practices in Europe and The United States 109 (Baums, Theodor & Wymeersch, Eddy, eds. 1999); Baums, The German Banking System and its Impact on Corporate Finance and Governance, in: The Japanese Main Bank System 409 (Aoki, Masahiko & Patrick, Hugh, eds. 1995); and Baums, Takeovers versus Institutions in Corporate Governance in Germany, in: Contemporary Issues in Corporate Governance 151 (Prentice, D. D. & Holland, P. R. J., eds. 1993).Google Scholar

10 Gruson, Michael, Banking Regulation and Treatment of Foreign Banks in Germany, in: Regulation of Foreign Banks 339 (Gruson, Michael & Reisner, Ralph, eds. 3rd ed. 2000).Google Scholar

11 Norbert Horn, ed. German Banking Law and Practice in International Perspective (1999).Google Scholar

12 See, for example, Stolleis, Michael, A History of Public Law in Germany 1914-1945 (Thomas Dunlap, trans., 2004). The German edition of this work is cited in footnote 4.Google Scholar

13 The chapter is available free of charge in PDF form on the Oxford University Press website at http://www.oup.co.uk/pdf/0-19-925316-1.pdf.Google Scholar

14 Krahnen, Jan Pieter & Schmidt, Reinhard H., eds. The German Financial System 4 (2004).Google Scholar

15 See Milgrom, Paul and Roberts, John, Complimentarities and fit: Strategy, structure and organizational change in manufacturing, 19 Journal of Accounting and Economics 180, 181 (1995).Google Scholar

16 Krahnen, & Schmidt, , supra note 14, at 29.Google Scholar

17 Id., at 62.Google Scholar

18 On the Investment Modernisation Act, see Wallach, Edgar, Hedge Funds Regulation in Germany, in: Hedge Funds: Risks and Regulation 119 (Baums, Theodor & Cahn, Andreas, eds. 2004).Google Scholar

19 Since the book was published, Germany has adopted the Investor Protection Improvement Act of 28 October 2004 (Das Gesetz zur Verbesserung des Anlegerschutzes vom 28.10.2004), which significantly amended the Securities Trading Act (Wertpapierhandelsgesetz) to bring German rules on insider dealing and market manipulation into conformance with EU rules, a Business Integrity and Modernization of Shareholder Actions Act (Gesetzes zur Unternehmensintegrität und Modernisierung des Anfechtungsrechts, or “UMAG”), which facilitates shareholder suits against management, and the Securities Suit Joinder Act (Gesetzes zur Einführung von Kapitalanleger-Musterverfahren), which allows a number of related securities complaints to be joined together for streamlined proceedings.Google Scholar

20 For a summary of the German government's program to reform corporate governance and the measures taken up through 2002, see Baums, Theodor, Company Law Reform in Germany, Journal of Corporate Studies 181 (2003). Professor Baums chaired the government's special Commission that studied German corporate and securities law and produced a report containing recommendations in 2001. For an inside account of the Commission's work, see Baums, Reforming German Corporate Governance, Interview, 2 German L.J. No. 12 (16 July 2001), available at: http://www.germanlawjournal.com/article.php?id=43. Most of the Government Commission's recommendations have been enacted. See preceding note for a partial list of laws enacted. An English translation of the Commission's recommendations is available as an annex to Theodor Baums, Company Law Reform in Germany, Institut für Bankrecht Arbeitspapier No. 100 (2003), available at http://www.jura.uni-frankfurt.de/ifawz1/baums/Bilder_und_Daten/Arbeitspapiere/.Google Scholar

21 For an in-depth analysis (in German) of the German regulation of debt issues and reforms that are being contemplated, see Baums, Theodor & Cahn, Andreas, eds. Die Reform des Schuldverschreibungsrechts (2004).Google Scholar

22 For information on the establishment of Eurex, see Kümpel, Siegfried, Bank- und Kapitalmarktrecht 2085 ET. SEQ. (2nd ed. 2000). Current information on Eurex, including a link to information on its Chicago-based subsidiary, eurex US, is available at http://www.eurexchange.com/index.html.Google Scholar

23 As Pagano and von Thadden note, “The volume of trade on EUREX has increased almost tenfold between 1996 and mid-2001, from € 172.4 billion to € 1,639.1 billion …. In the process it killed off Bund futures trading on London's LIFFE. Also futures trading in French, Italian, and Spanish bonds dwindled into disappearance by 2001.” Marco Pagano & Ernst-Ludwig von Thadden, The European Bond Markets under EMU 16 (Working Paper, November 2004), Forthcoming in the Oxford Review of Economic Policy.Google Scholar

24 See Krahnen, & Schmidt, , supra note 14, at 44.Google Scholar

25 Hackethal, Andreas & Schmidt, Reinhard H., Financing Patterns: Measurement Concepts and Empirical Results, Working Paper No. 33, Finance and Accounting Series, University of Frankfurt (2003), a revised version (WP 125) is available at http://www.wiwi.uni-frankfurt.de/schwerpunkte/accounting/index.php?men=4&lg=0&case=wp.Google Scholar

26 Krahnen, & Schmidt, , supra note 14, at 46, also see p. 94.Google Scholar

27 Id., at 46.Google Scholar

28 Id.Google Scholar

29 “Intermediation ratios measure the proportion of sectors’ total financial assets and liabilities, respectively, that constitute claims on financial institutions (asset intermediation ratios) or liabilities vis-à-vis financial institutions (liability intermediation ratios)”, id. at 90-91.Google Scholar

30 “Securitization ratios take an instrumental perspective and measure the proportion of total claims and liabilities, respectively, that take the form of securities”, id. at 91.Google Scholar

31 Krahnen, & Schmidt, , supra note 14, at 93-94.Google Scholar

32 Id., at 100-101.Google Scholar

33 Id., at 211-212.Google Scholar

34 Id., at 227.Google Scholar

35 See Law for Monitoring and Transparency in Business Undertakings (Gesetz zur Kontrolle und Transparenz im Unternehmensbereich).Google Scholar

36 See Law Concerning Registered Shares and to Facilitate the Exercise of Voting Rights (Gesetz zur Namensaktie und zur Erleichterung der Stimmrechtsausübung).Google Scholar

37 See Krahnen, & Schmidt, , supra note 14, at 200-202.Google Scholar

38 See Barca, Fabrizio & Becht, Marco, The Control of Corporate Europe (2001).Google Scholar

39 See Krahnen, & Schmidt, , supra note 14, at 227.Google Scholar

40 See Schmidt, Reinhard H. & Spindler, Gerald, Path dependence and complementarity in corporate governance, in: Convergence and Persistence in Corporate Governance, supra note 3, at 114.Google Scholar

41 See Krahnen, & Schmidt, , supra note 14, at 395. For a similar finding of complementary between at least two of these elements, see also Roe, , Determinants supra note 7, at 81 (“Codetermination and block ownership are complementary, and it is hard for one to exit without the other also existing, irrespective of which one came first.”)Google Scholar

42 Krahnen, & Schmidt, , supra note 14, at 396.Google Scholar

43 Id., at 397.Google Scholar

44 Id.Google Scholar

45 Id., at 403. The economic consideration that controlling shareholders may have to be compensated for monitoring activities has also been raised by thoughtful commentators with regard to U.S. corporate law. See Gilson, Ronald J. & Gordon, Jeffrey N., Controlling Controlling Shareholders, 152 U. Pa. L. Rev. 785 (2003).Google Scholar

46 See Bericht der Regierungskommission “Corporate Governance“ (Theodor Baums, ed. 2001).Google Scholar

47 See supra note 19.Google Scholar

48 Krahnen, & Schmidt, , supra note 14, at 406, emphasis added.Google Scholar

49 See id., at 389.Google Scholar

50 See id., at 498-513.Google Scholar

51 Id., at 512.Google Scholar