Abstract
This study examines whether changes in ultimate firm ownership (control) play a disciplinary role in a bank-based economy. We focus on Germany as the prototype of a bank-based system. We find that poor performance makes a change in control more likely; this suggests a disciplinary role. Tight shareholder control acts as a substitute for control changes, strong creditor control as a complement. Following a change in control, management turnover increases, but not as a consequence of poor performance, and performance does not improve significantly. These findings are inconsistent with a disciplinary role of the market for corporate control in bank-based Germany.
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