More is likely to come on stream this year, thanks to new German tax laws which exempt the sale of corporate shareholdings from capital-gains tax.
Between March and September, corporate shareholdings wiped ¥330 billion in value from more than 160 public firms.This punishes companies, even though their actual business remains unchanged.
Paul Achleitner, Allianz's finance chief, and guardian of its corporate shareholdings, is said to have leaned on Bernd Fahrholz, Dresdner's new boss, to sit down with his opposite number at Commerzbank, Martin Kohlhaussen.
These assets were, in turn, handed to IBRA, along with a mountain of corporate shareholdings pledged by bank owners against money they borrowed from the central bank in 1997 -- money that still has not been fully accounted for.
At the heart of this is Chancellor Gerhard Schrder's plan to eliminate the 50% capital-gains tax on corporate shareholdings.
As cross-shareholdings are unwound, companies will no longer be able to count on unquestioning support from chummy corporate shareholders.
Good points: lifetime employment encouraged loyalty and high skill levels; public services, especially education, of high quality; close relations between banks and other firms; corporate cross-shareholdings shelter managers from impatient shareholders, allowing them to take a long-term view of investment.
Income- and corporation-tax rates have been cut, and capital-gains tax on sales of corporate cross-shareholdings has been abolished.
These corporate cross-shareholdings have come under pressure during the financial crisis, as many of the Italian companies and banks have suffered slowdowns in their revenue because of dwindling domestic growth.
They are not keen on rococo corporate structures (cross-shareholdings between units based in assorted offshore jurisdictions, say) which mere mortals can scarcely understand, let alone disentangle in a crisis.
Related research from the Program on Corporate Governance includes Horizontal Shareholding (discussed on the Forum here); and New Evidence, Proofs, and Legal Theories on Horizontal Shareholding (discussed on the Forum here), both by Einer Elhauge; and Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy by Lucian Bebchuk and Scott Hirst (discussed on the forum here).
