The German Corporate Governance Code. Structure, Aims and an Assessment of its Implementation in DAX & MDAX-Companies (PDF)

Seminar paper from the year 2016 in the subject Business economics - Business Management, Corporate Governance, grade: 1,0, University Witten/Herdecke, language: English, abstract: In the early days, the academic research in the field of corporate governance (hereafter: CG) developed largely in silos, depending on the areas of interest of the respective researchers. Since the last decade however, researchers pay more attention to the formation of a holistic approach that focusses on the effectiveness and efficiency of CG as a whole.

From a practitioner's view, CG methods are essential in order to improve sustainable economic growth, economic efficiency and the trust of national and international investors. Due to the takeover wave during the 1980s, the advancing deregulation and globalisation of the capital markets as well as the Asian financial crisis in the end of the 1990s, CG has gained a greater profile. This was reinforced by several corporate scandals in the U.S. (e.g. Enron) but also in Europe in the early 2000s. Because of this, voices for a higher necessity of responsible management and CG have arisen.

For Germany in particular, the Holzmann scandal during the turn of the millennium compelled the German legislator to step up its monitoring on CG of listed companies. As a consequence, the German Corporate Governance Code was established by its eponymous government commission in 2002. The objective of the establishment was not only to strengthen the confidence in the German CG and corporate control system, but also to provide suggestions for a modernisation of the legislation with respect to the ongoing globalisation and internationalisation of the capital markets and the accompanying transformation of corporate and market structures.

After building a theoretical background on the basics of CG, the paper focusses on the German Corporate Governance Code: First, its development history will be mentioned and a brief definition will be given, followed by its tasks and objectives as well as its structure and content. Afterwards, the implementation of the Code in German corporations - with focus on the largest German corporations (DAX and MDAX-members) - will be analysed.