Title: The choice of alternative corporate governance systems: ownership structures and performance in Italian unlisted firms in 2008

Authors: Carlo Bellavite Pellegrini; Laura Pellegrini; Emiliano Sironi

Addresses: Department of Economic and Business Management Sciences, Catholic University, Via Necchi 5, 20123 Milan, Italy; CeMaFiR - Centre for Macroeconomics and Finance Research, Piazza Mirabello, 2, 20121, Milan, Italy ' Department of Economic and Business Management Sciences, Catholic University, Via Necchi 5, 20123 Milan, Italy; CeMaFiR - Centre for Macroeconomics and Finance Research, Piazza Mirabello, 2, 20121, Milan, Italy ' Department of Statistical Sciences, Catholic University, Via Necchi 9, 20123 Milan, Italy; "Paolo Baffi" Centre on Central Banking and Financial Regulation, Bocconi University, Via Roentgen 1, 20136 Milan, Italy

Abstract: The 2003 Italian corporate law reform, which established one-tier and two-tier boards for listed and unlisted joint stock companies, introduced alternative corporate governance systems. In addition to the traditional model, which, at least in its basic features, continues to be used by the Italian legislator, the two 'alternative' models of corporate governance generated by the 2003 reform differ in terms of their methods of appointment of managing and controlling bodies. Taking into account the surprisingly limited adoption of the new systems introduced by the reform after five years, this work implements regression analyses in order to compare the choice of corporate governance systems in Italian unlisted firms: the corporations with best performances in terms of return on assets have continued to use the traditional system; moreover, firms with a less concentrated ownership structure and the lowest proportion of individual shareholders have adopted a two-tier model. These findings support the preference of a two-tier board system for pyramidal structured companies hold by family groups.

Keywords: corporate governance; one-tier boards; two-tier boards; firm performance; ownership structure; risk; Italy; unlisted firms; return on assets; individual shareholders; family groups.

DOI: 10.1504/IJTGM.2013.054878

International Journal of Trade and Global Markets, 2013 Vol.6 No.3, pp.242 - 261

Received: 11 Jun 2012
Accepted: 06 Aug 2012
Published online: 30 Sep 2014 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article