Stewardship and Shareholder Engagement in Germany

45 Pages Posted: 9 Mar 2020 Last revised: 11 Mar 2020

See all articles by Wolf-Georg Ringe

Wolf-Georg Ringe

University of Hamburg - Institute of Law & Economics; University of Oxford - Faculty of Law; Stanford University; European Corporate Governance Institute (ECGI)

Date Written: February 26, 2020

Abstract

Corporate stewardship holds great promise for the improvement of shareholder engagement and the encouragement of more responsible and long-term oriented value creation. Many countries have now adopted a best practice code for the stewardship role of institutional investors and asset managers, but Germany has so far refused to follow that trend. This paper explores the reasons for this reluctance, as well as whether the adoption of a Stewardship Code would still make sense in the regulatory framework of Germany today.

Despite the increased presence of shareholder engagement (and even activism), several reasons may be put forward for why lawmakers have refused to adopt a stewardship code. This paper argues that the main political reason for this reluctance lies in the limited geographical reach of such a code, which would primarily apply to the (limited) domestic fund industry and would be unable to prescribe any meaningful principles to foreign-based asset managers. Still, I argue that the adoption of a code in the German context may make sense, for example to define expectations and to clarify the obligations of investee companies. Most importantly, it would benefit domestic investors that are typically ‘home biased’ and thereby frequently disproportionately invested in domestic funds.

Keywords: stewardship, shareholder engagement, institutional investors, Germany

JEL Classification: G34, G38, K22

Suggested Citation

Ringe, Wolf-Georg, Stewardship and Shareholder Engagement in Germany (February 26, 2020). European Corporate Governance Institute - Law Working Paper No. 501/2020, Available at SSRN: https://ssrn.com/abstract=3549829 or http://dx.doi.org/10.2139/ssrn.3549829

Wolf-Georg Ringe (Contact Author)

University of Hamburg - Institute of Law & Economics ( email )

Johnsallee 35
Hamburg, 20148
Germany
+49 40 42838 7787 (Phone)
+49 40 42838 6794 (Fax)

HOME PAGE: http://www.ile-hamburg.de

University of Oxford - Faculty of Law

St Cross Building
St Cross Road
Oxford, OX1 3UL
United Kingdom

HOME PAGE: http://www.law.ox.ac.uk/people/wolf-georg-ringe

Stanford University ( email )

Stanford Law School
559 Nathan Abbott Way
Stanford, CA 94305
United States

HOME PAGE: http://law.stanford.edu/directory/wolf-georg-ringe/

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://ecgi.global/users/wolf-georg-ringe

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
721
Abstract Views
2,570
Rank
65,693
PlumX Metrics