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Abstract:
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paper explores the relationship between the Danish banks and their
stockholders. The recent crisis in the financial markets has uncovered massive
problems with corporate governance in the Danish banking sector and particularly
the role of shareholders and their influence on the management of the banks has
been viewed as an important cause of the crisis. The paper starts off with a brief
discussion of corporate governance problems that arise in and are unique for the
banking sector from an agency theory point-of-view. After this introductory
discussion the paper embarks on a survey of a sample of banks that are grouped
according to how well they have managed through the crisis. The survey shows that
the managements of the Danish banks have had a large degree of discretion when
controlling their banks and the survey indicates that agency problems such as
irresponsible growth and entrenchment can be found in the Danish banks.
Stockholders’ options for engaging in the control of the banks are analyzed, and the
paper then argues that the agency problems found in the banks are the result of a
lack of influence from shareholders, which then again stems from institutional
factors such as the ownership structure in Danish Banks, and corporate law-statutes
that provide for the undermining of shareholder influence.
After a short review of the common viewpoints from international and national
institutions on shareholder activism, measures that can increase the incentives for
shareholders to take a more engaged perspective on ownership on the Danish banks
are introduced. These measures include the abolishment of voting ceilings, which
are common in the Danish banks, and an introduction of double voting rights shares
dependent on time of ownership, and the consequences of incorporating the
measures in the Danish are analyzed. Lastly, a summarizing conclusion is given to the
issues raised in the first chapter of the paper. |
