From Shareholder to Stakeholder Capitalism: Value Creation by Board Composition, Ownership Structure and Information Disclosure

This dissertation is dedicated to analysing the shift of the primacy of shareholder value to a focus on stakeholder value and the use of information disclosure, ownership structure, and board composition as instruments or levers for value generation in light of this shift. Environmental, social and governance (ESG) topics are becoming omnipresent in capital markets and various stakeholders put management under pressure to act sustainably and to incorporate environmental and social impact goals. Therefore, we first analyse the disclosure of ESG-related information in annual reports and how various measures of impression management (IM) with regard to ESG-related content affect the stakeholders’ assessment of a firm’s credit risk. We show that credit default swap (CDS) markets incorporate ESG-related information in their assessment of a firm's risk. This is significant because we make management aware of IM measures that could be used as proxies for credit risk by various stakeholders and thus help executives mitigate information asymmetry and enhance transparency. Further, we find evidence that firms might engage in strategic IM to positively influence public perception of their credit risk. Therefore, we provide important implications for rating agencies who need to monitor IM biases when interpreting qualitative ESG-related disclosures. We continue to analyse the extension of top management orientation from a shareholder value perspective to a broader stakeholder perspective with a focus on ownership structure. Accordingly, we examine market reactions caused by open letters published by the activist investor Petrus Advisers - who is a minority shareholder - on the target companies' share prices with a regional focus on Continental Europe. Positive capital market reactions are only triggered by initial disclosures directly addressed to the board of the target companies. We therefore suggest that open letters may not be the most favourable single instrument for activist investors in Europe to raise pressure on the executive board. Additionally, we examine how a new position within an organization's leadership ranks affects stakeholder value and implicitly the governance structure of a company. As digital innovation is increasing, more and more companies appoint a Chief Digital Officer (CDO). We analyse market reactions to announcements of newly created CDO positions between 2012 and 2020 and how reactions differ across time periods, sectors and geographical regions. Our results imply that investors perceive that significant value arises when a CDO role associated with the management of the business’s growth and digital transformation strategy is created. The perceived value by stakeholders is even higher the earlier a company takes on the challenges of digital transformation. This cumulative dissertation comprises three stand-alone papers, of which two papers have already been published