Country Analyses, Second Edition
Edited by Christine A. Mallin
Chapter 4: Corporate governance in Italy: normative developments vs. actual practices
Andrea Melis and Silvia Gaia INTRODUCTION International taxonomies of corporate governance list Italy, along with other continental European countries, as within the insider-dominated relationshipbased corporate governance systems, in contrast to the outsider market-based systems that characterize the Anglo-American countries (for example, La Porta et al., 1999; Clarke, 2007). In contrast to Anglo-American corporate governance systems, and similar to other insider-dominated relationship-based systems, a relatively small equity market (for example, La Porta et al., 1997), a comparatively poor capital market orientation (Pagano et al., 1998), and a very limited role played by the market for corporate control (Volpin, 2002) characterize the Italian institutional setting. The major corporate governance concern in Italian listed companies is not about ‘strong managers’ who are unaccountable to ‘weak owners’ (Roe, 1994). Empirical studies on Italian listed companies (for example, Molteni, 1997; Melis, 1999; Bianchi et al., 2001) reported that Italian executive directors are usually accountable (and even ‘loyal’) to large controlling shareholders. CEO turnover is more closely related to relevant changes in the corporate ownership and control structure than to corporate performance (Brunello et al., 2003), especially in familycontrolled listed companies, where corporate performance seems to play little if no role in the CEO turnover (Compagno et al., 2009). In contrast to other insider-dominated continental European corporate governance systems (such as Germany), banks do not usually have a direct significant influence on the corporate governance of Italian non-financial listed companies (Bianco and Casavola, 1996; Airoldi and Forestieri, 1998). With few exceptions (for example, Mediobanca), Italian banks...
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