Corporate Governance - Derivatives and Hidden Ownership: not just a German problem

Document summary

The failed pursuit of VW last year involving the use of cash-settled derivative options (a synthetic instrument) exposed a fundamental weakness in capital markets and has significant implications for corporate governance and market transparency. CA Cheuvreux explores how hidden ownership links to less efficient pricing in capital markets due to lack of information on corporates' control structures, lack of transparency on large holdings and transactions, possible conflicts of interest and creeping control.