Supervisory Boards of Joint Stock Companies and Employee Co-determination in the Czech Republic
| Název práce v češtině: | Dozorčí rady akciových společností v ČR a zastoupení zaměstnanců v dozorčích radách |
|---|---|
| Název v anglickém jazyce: | Supervisory Boards of Joint Stock Companies and Employee Co-determination in the Czech Republic |
| Klíčová slova: | Zaměstnanecká kodeterminace, Dozorčí rady, Corporate Governance, Dualistický systém corporate governance, České akciové společnosti, Analýza dynamického panelu dat |
| Klíčová slova anglicky: | Employee co-determination, Supervisory Boards, Corporate Governance, Two-tier corporate governance, Czech joint stock companies, Dynamic panel data |
| Akademický rok vypsání: | 2018/2019 |
| Typ práce: | diplomová práce |
| Jazyk práce: | angličtina |
| Ústav: | Institut ekonomických studií (23-IES) |
| Vedoucí / školitel: | doc. PhDr. Martin Gregor, Ph.D. |
| Řešitel: | skrytý - zadáno vedoucím/školitelem |
| Datum přihlášení: | 29.07.2020 |
| Datum zadání: | 29.07.2020 |
| Datum a čas obhajoby: | 14.09.2022 09:00 |
| Místo konání obhajoby: | Opletalova - Opletalova 26, O109, AULA Michala Mejstříka č. 109 |
| Datum odevzdání elektronické podoby: | 28.07.2022 |
| Datum proběhlé obhajoby: | 14.09.2022 |
| Oponenti: | PhDr. Pavel Vacek, Ph.D. |
| Kontrola URKUND: | |
| Zásady pro vypracování |
| In dualistic corporate governance system, which is prevalent in the Czech Republic, the executive board of directors is complemented with supervisory board (sometimes called advisory board). Ultimate purpose of this body is to oversee the management and prevent misconduct, or unwise decisions harmful to the interests it represents. Existence of supervisory board is mandatory only for dualistic joint stock companies and its default role given by the law is strictly controlling – it has granted access to all relevant documents, but no means to enforce the represented interests.
In the Czech corporate governance practice, legal requirements set only minimum standards on advisory board design, composition and competences. Shareholders are therefore to large extent free to assign their advisory board competences above the default level, or to set up own supervisory board design, both though collective decision of the General Assembly. Both, design and competences of Czech supervisory boards can therefore substantially differ from each other. In addition to that, there have been several novelizations of the applicable legal framework in past years. Probably the most significant and legally binding change of the last decade was the relaxation and following re-introduction of co-determination requirement. This requirement is relevant for all two-tier joint stock companies with over 500 employees and reserves at least one third of the supervisory board to employee representatives. The relaxed legislation and a series of policy shifts thus opens interesting research questions: - How do the supervisory boards look like in practice? What is the design, competences, and who sits in the boards? - Is the provided legal default attractive as supervisory board design, or are shareholders motivated to deviate? - What are the impacts of the re-introduced employee participation? - Will shareholders somehow try to restrict the power of employee representatives within the board? - Will shareholders use the higher, than minimum required of employee representation in supervisory boards to signal good employment conditions? |
| Seznam odborné literatury |
| Adams, R. B., Hermalin, B. E., Weisbach, M. S. (2010). The role of boards of directors in corporate governance: A conceptual framework and survey. Journal of Economic Literature, 48(1), 58--107.
Bozhinov, V., J. Joecks, & K. Scharfenkamp (2021): “Gender spillovers from supervisory boards to management boards.” Managerial and Decision Economics 42(5): pp. 1317–1331. Fauver, L. & M. E. Fuerst (2006): “Does good corporate governance include employee representation? Evidence from German corporate boards.” Journal of Financial Economics 82(3): pp. 673–710. Florián, Ondřej, W. R. (2020): “Průvodce korporátním světem po novele (část I.) [Guide to corporate law guide after novelization - part I.].” Corporate Flash 9. Furubotn, E. G. (1988): “Codetermination and the modern theory of the firm: A property-rights analysis.” The Journal of Business (Chicago, Ill.) 61(2): pp. 165–18. Gorton, G. & F. A. Schmid (2004): “Capital, labor, and the firm: A study of german codetermination.” Journal of the European Economic Association 2(5): pp. 863–905. Jensen, M. C. & W. H. Meckling (1979): “Rights and production functions: An application to labor-managed firms and codetermination: I. introduction.” The Journal of Business (Chicago, Ill.) 52(4): pp. 469. Njoya, W. (2004): “Employee ownership and efficiency: An evolutionary perspective.” Industrial law journal (London) 33(3): pp. 211–241. Žigraiová, D. (2015): “Management Board Composition of Banking Institutions and Bank Risk-Taking: The Case of the Czech Republic.” Working Papers, Czech National Bank. |
| Předběžná náplň práce |
| Hypotheses
1. Hypothesis on co-determination impacts on competences of the board: Shareholders can collectively influence the design and competences of supervisory board through General Assembly decision-making. When the supervisory board represents purely shareholders, it is more powerful, than when employee representatives are involved through co-determination. Specifically, when employee representatives are present in the supervisory board, it is less likely to have power to elect and recall executives. 2. Hypothesis on co-determination impacts on gender composition of the board: Co-determination can be a channel to open top-level corporate governance positions to people with different, than standard top-management profile. Specifically, in feminized industries such as Healthcare, the co-determination will help to bring more woman to the supervisory board. Methodology 1. Study the legal background and literature on joint stock company corporate governance and advisory board design in Czech Republic and Germany (major source of relevant literature) 2. Build up a sample of relevant companies that are a. In scope of Czech jurisdiction b. Having at least 500 employees (in order to qualify for the parity codetermination rules) c. Active for sufficient period of time to reflect all recent legislation changes and business cycle 3. Define 10 detailed research questions to set the perimeter for the descriptive analysis 4. Collect information on in-scope companies in along relevant period of time (2009-2020) a. Governance: One/Two tier structure [for one-tier structured organization, no further information was collected] b. Design: Supervisory board size, length of term, voting mechanism c. Competences: Power to elect / recall executives d. Codetermination: Number and proportion of co-determined employee representatives within the supervisory board e. Diversity: Gender composition of the supervisory board, Education of board members 5. Descriptive analysis a. By means of descriptive statistics, gather and describe insights from the collected data in context of the applicable legal framework 6. Quantitative analysis a. Use pertinent econometric method to analyze the collected panel data design and evaluate hypotheses i. H1: To evaluate co-determination impacts on the competences of the supervisory board ii. H2: To evaluate co-determination impacts on gender composition of the supervisory board 7. Explain and the results 8. Identify limitations of the research method 9. Conclude the study Expected Contribution 1. Data: Manual collection and processing of data on supervisory board design in the Czech Republic, enrichment of the collected dataset with information on the supervisory board members form Bisnode Magnus database and aggregation of descriptive statistics 2. Trends & Insights: Formulation of descriptive insights on of the Supervisory boards practice in the Czech Republic, focusing on institutional, and design and personnel features of supervisory board members, identification of recent trends 3. Policy evaluation: Evaluation of co-determination impacts on supervisory board competences and gender composition Outline 1. Legal framework: To provide context for following chapters, describe the Czech legal framework for corporate governance, specifically evolution of the supervisory boards design and legal requirements 2. Literature: Provide summary of influential literature, show what directions does the research take outside of Czech Republic and what are the key findings. 3. Introduction to the analytical part: definition of full set of research questions 4. Data description 5. Observations on the supervisory board practices: Present observations on the supervisory board practice addressing the defined research question, backed by descriptive evidence from the collected dataset 6. Empirical analysis: a. State the hypotheses and provide their reasoning in context of existing literature and observations b. Explain empirical approach (model set-up, data, empirical methods used) c. Present and interpret the estimation results d. Evaluate the stated hypotheses and discuss empirical findings in broader context. e. Reflect on limitations of the work 7. Concluding remarks: Summarize finding and propose further research direction |
| Předběžná náplň práce v anglickém jazyce |
| Hypotheses
1. Hypothesis on co-determination impacts on competences of the board: Shareholders can collectively influence the design and competences of supervisory board through General Assembly decision-making. When the supervisory board represents purely shareholders, it is more powerful, than when employee representatives are involved through co-determination. Specifically, when employee representatives are present in the supervisory board, it is less likely to have power to elect and recall executives. 2. Hypothesis on co-determination impacts on gender composition of the board: Co-determination can be a channel to open top-level corporate governance positions to people with different, than standard top-management profile. Specifically, in feminized industries such as Healthcare, the co-determination will help to bring more woman to the supervisory board. Methodology 1. Study the legal background and literature on joint stock company corporate governance and advisory board design in Czech Republic and Germany (major source of relevant literature) 2. Build up a sample of relevant companies that are a. In scope of Czech jurisdiction b. Having at least 500 employees (in order to qualify for the parity codetermination rules) c. Active for sufficient period of time to reflect all recent legislation changes and business cycle 3. Define 10 detailed research questions to set the perimeter for the descriptive analysis 4. Collect information on in-scope companies in along relevant period of time (2009-2020) a. Governance: One/Two tier structure [for one-tier structured organization, no further information was collected] b. Design: Supervisory board size, length of term, voting mechanism c. Competences: Power to elect / recall executives d. Codetermination: Number and proportion of co-determined employee representatives within the supervisory board e. Diversity: Gender composition of the supervisory board, Education of board members 5. Descriptive analysis a. By means of descriptive statistics, gather and describe insights from the collected data in context of the applicable legal framework 6. Quantitative analysis a. Use pertinent econometric method to analyze the collected panel data design and evaluate hypotheses i. H1: To evaluate co-determination impacts on the competences of the supervisory board ii. H2: To evaluate co-determination impacts on gender composition of the supervisory board 7. Explain and the results 8. Identify limitations of the research method 9. Conclude the study Expected Contribution 1. Data: Manual collection and processing of data on supervisory board design in the Czech Republic, enrichment of the collected dataset with information on the supervisory board members form Bisnode Magnus database and aggregation of descriptive statistics 2. Trends & Insights: Formulation of descriptive insights on of the Supervisory boards practice in the Czech Republic, focusing on institutional, and design and personnel features of supervisory board members, identification of recent trends 3. Policy evaluation: Evaluation of co-determination impacts on supervisory board competences and gender composition Outline 1. Legal framework: To provide context for following chapters, describe the Czech legal framework for corporate governance, specifically evolution of the supervisory boards design and legal requirements 2. Literature: Provide summary of influential literature, show what directions does the research take outside of Czech Republic and what are the key findings. 3. Introduction to the analytical part: definition of full set of research questions 4. Data description 5. Observations on the supervisory board practices: Present observations on the supervisory board practice addressing the defined research question, backed by descriptive evidence from the collected dataset 6. Empirical analysis: a. State the hypotheses and provide their reasoning in context of existing literature and observations b. Explain empirical approach (model set-up, data, empirical methods used) c. Present and interpret the estimation results d. Evaluate the stated hypotheses and discuss empirical findings in broader context. e. Reflect on limitations of the work 7. Concluding remarks: Summarize finding and propose further research direction |