The Ethics of Banking: Conclusions from the Financial Crisis (Issues ...

Corporate Governance by Consensus and by Competition 77
manager salaries – by means of compensation payments. For this reason, the criticism
frequently voiced over high severance payouts to managers who are replaced
in hostile takeovers needs to be tempered.
A further argument for permitting hostile takeovers as a necessity is that shareholders
in general, and shareholders of large, anonymous joint-stock corporations
in particular, cannot constantly be present in the company and assert their interests,
and, therefore, can only avoid being taken advantage of via their right to appoint or
dismiss the management team.
The argument that the threat of takeover raises the efficiency of management
cannot be dismissed out of hand. It is, however, doubtful whether its application
necessarily involves total acceptance of the theory of shareholder value. It could
be that shareholder value is also a necessary principle of control, because of the
disciplining effect of the threat of takeover, but this need not imply that shareholdervalue
maximization is the firm’s purpose. 8
Corporate Governance by Self-Control Through Stakeholder
Consensus, and Corporate Governance by Competition
from Outsiders: The German and the Anglo-American
Model of Corporate Governance
In contrast, the German model of business management presumes that a consensus
of all the stakeholder groups, for the very fact that it is a consensus, is best for
the company and ensures the optimum decisions. Dissent between the company’s
workforce and stakeholder groups is viewed, in that culture, as a sign of crisis and
inadequate management, whereas consensus – wholly in keeping with Habermas’s
consensus theory of truth – is seen as a guarantee of the rightness of decisions.
It is not hard to see that the discrepancy between the consensus principle and the
shareholder-value principle is based on wide-ranging philosophical differences in
the conception of governance, of management, leadership and government – indeed,
of constitution, – which extend right into the political constitutional debate. Under
the German or continental European understanding of republican government and
constitution, the idea of self-government by consensus is the guiding model. In
Anglo-American republicanism, the dominant idea is that of government by the
representation of groups, and the replacement of adversarial political government
teams and economic management teams by the mechanism of extrinsic, decisive
competition for the approval of voters and shareholders. The globalization of the
competition between management teams and the globalization of the capital markets
foster the competition principle rather than the consensus principle, because
globalization undermines if not destroys national and regional consensuses.
8 On the shareholder value principle, cf. Chapter 9, below.