Independence in the Era of Shareholder Activism

Maria Grigoropoulou (University of Hamburg)


In this Article, I analyze the requirement of directors’ independence from controlling shareholders in German corporations. I, firstly, present the regulatory framework in the US and in Germany, with a special focus on the provisions of German Corporate Governance Code. Then, I provide an overview of shareholder activism in Germany the last two decades, in order to highlight the increasing influencing power of minority shareholders, such as hedge funds. Using empirical evidence from activist campaigns in the US, I show that ownership structure and directors’ perception about the degree of collaboration between institutional investors and hedge fund activists create a dependence relationship between directors and shareholders with a minority equity stake. I conclude that the concept of independence from controlling shareholder should be revised from the Corporate Governance-Committee in order to capture control by minority shareholders.

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