Pathways to Corporate Convergence? Two Steps on the Road to Shareholder Capitalism in Germany

5 Colum. J. Eur. L. 219 (1999)

Jeffrey N. Gordon. Alfred W. Bressler Professor of Law, Columbia University Law School.

One of the most interesting current debates in corporate law is whether worldwide corporate governance will ultimately converge on a single model in light of the increasing globalization of capital markets, and if so, whether it will be an Anglo-American model whose features are shaped by the shareholder primacy norm. Convergence skeptics have focused on the embeddedness of governance systems in national political structures that tend to protect both entrenched insider interests and non-shareholder constituencies against the incursions of Anglo-American governance agendas. Convergence optimists have focused on the evolutionary pressures of competitive international capital markets and on the tendency of firms that seek to achieve global scale to opt into high-quality securities market regulatory regimes that will promote transparency, accountability and shareholder fiduciary protection. While not subscribing to the inevitability of convergence, I think there is another convergence route that will become increasingly influential: the cross-border acquisition. Important factors include the intensifying pace of cross-border acquisition activity generally; the increasing economic integration of “Euroland” following the introduction of the Europan common currency; and the ubiquity of common stock as an acquisition currency, if only because of the sheer size of the transactions. Cross-border stock mergers will thus frequently trigger an influx of new shareholders who may have different governance traditions and expectations and who may now be especially concerned to ensure that shareholder interests are protected in the system they have been merged into. The new influence may change the governance landscape not only in the cross-border case but may help establish a “best practice” model that influences other local firms. This article explores this hypothesis in the context of two transactions that push the limits of shareholder capitalism in Germany-the privatization of Deutsche Telekom and the merger of Chrysler and Daimler-Benz.