The financial crisis has led to a loss of trust towards corporate governance quality and the balance of the European financial market. This became also apparent for Germany. In Germany financial companies' compliance with the German Corporate Governance Code (GCGC) represents a basic standard...

In this paper, a model of bounded rational investors investing their portfolio in a passive investment vehicle (e.g., an Exchange Traded Fund replicating a broad index) or an actively managed fund is presented. The model proposes that the quick reswitching of these short-term oriented investors...