Following Germany's 1976 strengthening of codetermination laws to 1/2 board representation for 2,000+ employee firms, capital-labor ratios declined (favoring capital formation), productivity declined, and profitability increased.

Study uses panel data set of 63 firms covering years between 1970 - 1985, concluding that parity-codetermination (1/2 board representation) is associated with lower productivity but higher profitability, relative to 1/3rd board representation.