Firms with equal representation on the supervisory board (parity codetermination) have a 26% decline in market-to-book ratio, compared to firms with one-third representation.

"We find that firms with equal representation on the supervisory board have a significant 26 percent decline in the market-to-book ratio, compared to firms with one-third representation. Employees use their power in equal representation firms to increase the employees-to-sales and wage bill-to-sales ratios, consistent with resistance to firm restructuring. Shareholders attempt to counteract codetermination by increasing the leverage of the firm and by making board member compensation more sensitive to firm performance.”