Germany, Inc. – Legal data and empirical analyses on exchange-traded German stock corporations

• Applicant: Professor Dr. Andreas Engert
• Subject Area: Private Law
• Term: since 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 461199262

The project has two main objectives. (I) Firstly, the project aims to provide better legal data for empirical research in law, economics, and social science about listed German stock corporations. For this purpose, a database with standardized legal data will be created and made available to the public free of charge. The database will contain the entirety of German stock corporations and their shares to the extent they are traded on the regulated or open market (“regulierter Markt” or “Freiverkehr”) at the German stock exchanges in 1960–2020. For these stock corporations, all corporate changes from 1990 onwards will be coded based on records from the commercial register. In addition, the ownership structure as it appears from major shareholdings disclosure mandated since 1995 will be made available. (II) The second objective is to exploit the new database for three empirical legal research projects. (1) For one thing, the development of German stock markets in the years 1960 to 2020 will be analyzed in detail in terms of levels (number of stock corporations, market capitalization, trading volumes) and changes (entry and exit of stock corporations, capital inflows and outflows) in the regulated and open market. The guiding question will be the relative attractiveness of the stock market compared to other sources of equity financing. Also, the descriptive analyses are meant to stimulate novel hypotheses about the effects of changes in the law on equity financing. (2) For another thing, the ownership structure of listed German stock corporations in the years 1995 to 2020 will be examined and traced over time. Special attention will be paid to an assessment and refinement of the hypothesis that “Germany, Inc.” has been dissolving around the year 2000 as well as to potential legal or tax explanations for this change. (3) Finally, the comprehensive coding of corporate changes and transactions in the new database will be used to empirically investigate two forms of judicial review of company valuations, namely the action for annulment of resolutions (“Anfechtungsklage”) and appraisal proceedings (“Spruchverfahren”). On the one hand, a potential asymmetry in protection afforded to minority shareholders will be analyzed along with its development over time. On the other hand, the project will evaluate appraisal proceedings as the more specific type of judicial review of company valuation. The incidence of appraisal complaints relative to relevant transactions and their outcomes will be considered to determine whether appraisal proceedings work to discipline and incentivize transaction designers to offer fair compensation to minority shareholders.

• DFG Programme: Research Grants