The Development of Corporate Governance in Germany-Some Annotations to Jeffrey Gordon

5 Colum. J. Eur. L. 243 (1999)

Christina Escher-Weingart. Assistant Law Teacher, Johann Wolfgang Goethe-Universitit, Frankfurt am Main, Germany.


As stated in Jeffrey Gordon’s article, “Pathways to Corporate Governance? Two Steps on the Road to Shareholder Capitalism in Germany,” the global stock offering by Deutsche Telekom AG did not succeed considerably in promoting a shareholder culture in Germany. In addition to all the aspects related to the capital market which Gordon has broken down in great detail, he is absolutely correct in stressing one core fact which, although unpopular, is of fundamental importance: in Germany, stakeholder capitalism continues to prevail over shareholder capitalism and this is strongly tied to the inflexible labor regime. It is not only the labor law, which when changed will undoubtedly entail transition costs, that promotes stakeholder capitalism. Beyond the labor aspects, both tax law and balance-sheet regulations foster stakeholder capitalism.