Dynamic efficiency of supervisory board codetermination in Germany

  • Renaud S
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Abstract

The aim of this paper is to consider the implications of structural changes, e.g. changing skill composition of the labor force, on the economic advantages and disadvantages of supervisory board co-determination in Germany. Theoretical considerations and an overview of the empirical literature on supervisory board co-determination are given in the first section of the paper. The second section deals with the empirical evidence of the theoretical effects. The basic idea is to compare the long-term differences in productivity and profitability of companies with quasi-parity co-determination to companies that are only obliged to give one-third of their supervisory board seats to labor representatives. Interestingly, the switch from one-third to parity co-determination seems to increase both productivity and profits. In the longer term, the productivity effect does not seem to change, whereas the profit effect shows an improving path.

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Authors

  • Simon Renaud

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