Corporate Governance in Italy After the 1998 Reform: What Role for Institutional Investors?

Schnatterly

et al. 2010

J Management Studies

We provide a review of the literature surrounding institutional investor classifications, and we extend this research by examining the aforementioned classification systems and relate this to the three predominant financial systems (market-based, family-centred, and bank-centred systems). After integrating this literature we propose that future research can contribute to the corporate governance field in three main ways: through improved measurement of the central constructs, through more complex research designs (through moderated and/or longitudinal relationships), and through asking new types of questions. We suggest several questions and approaches for future research on institutional investors and their interrelationship with country financial systems. Copyright (c) 2010 The Authors. Journal of Management Studies (c) 2010 Blackwell Publishing Ltd and Society for the Advancement of Management Studies.

Section: Institutional Owners' Ability To Influence Managementmentioning

confidence: 99%

Section: Institutional Owner Legal Typementioning

confidence: 99%

Institutional Investors and Institutional Environment: A Comparative Analysis and Review

Schnatterly

et al. 2010

J Management Studies

“…Concerning the national law and regulations, some reforms in the commercial law (1998, 2003, and 2005) and the introduction (1999) and update (2002) of the national code of good governance contributed to the improvement of the corporate governance of listed companies (Zattoni, 2006). Financial markets and corporate law reforms improved the efficiency of the Stock Exchange and created an institutional environment more favorable to institutional investors' activism (Bianchi and Enriques, 2005). At the same time the introduction and update of the code of good governance contributed to the improvement of governance practices at the board level.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

The Diffusion of Equity Incentive Plans in Italian Listed Companies: What is the Trigger?

Zattoni

Minichilli

2009

Corporate Governance

Recent dynamics in the institutional and market environment have facilitated the propagation of equity incentive plans outside the US and the UK. This study sheds light on the reasons behind the diffusion of these plans in a country, Italy, where companies are usually controlled by a blockholder and where these instruments were almost absent until the end of the ‘90s.\ud To gain a deep understanding of the phenomenon, we collected data and information on both the diffusion and the technical aspects of equity incentive plans adopted by Italian listed companies in 1999 and 2005. The results show that (i) the determinant of their adoption is the firm size rather than the absence of a controlling shareholder; (ii) these plans are not extensively used to extract company value, although few cases suggest this possibility; and (iii) plans’ characteristics generally comply with the requirements in tax law so that fiscal benefits can be accessed. Our findings contribute to expand the traditional knowledge on reasons behind the adoption of equity incentive plans outside Anglo-Saxon countries, and support a symbolic perspective of corporate governance, according to which the introduction of new governance practices may not imply substantive governance reforms.\ud Practitioner/Policy implications: Our study recommends policymakers to improve the disclosure rules about these plans and to avoid the introduction of fiscal benefits that incentive the diffusion of some compensation schemes respect to others. Moreover, our results encourage members of remuneration committees to pay attention to the specific characteristics of the plans they design

“…Cortesi and Musile Tanzi (1998) provided a case history analysis on institutional activism in Italy, by reporting 27 cases between 1993 and 1997 (the most spectacular case was the successful struggle of the foreign institutional investors against Olivetti's senior management). Bianchi and Enriques (2001) argue that after 1998, institutional investors seem to be in a better position to take an active stance in corporate governance since they hold more relevant shareholdings. However, a concentrated ownership structure and the conflicts of interest that may arise because of the dominance of the mutual fund market by banking groups may be an obstacle to activism.…”

Section: Main Issues Problems and Debates On Corporate Governance Imentioning

confidence: 99%

“…There is some anecdotal evidence that Italian institutional investors have jointly presented lists of candidates for the board of statutory auditors (Bianchi and Enriques, 2001). However, it is too early to judge whether these auditors will act differently from the auditors appointed by the controlling shareholders.…”

Section: Size Composition Appointment and Dismissal Of The Board Ofmentioning

confidence: 99%

On the Role of the Board of Statutory Auditors in Italian Listed Companies

Melis

2004

Corporate Governance

This paper discusses the role of the board of statutory auditors as a monitoring device within the prevailing Italian corporate governance system, characterised by the presence of a strong blockholder. We describe the structure and functioning of the board of statutory auditors in the listed companies in terms of size, composition, method of appointment, powers, and duties after the changes due to the Draghi reform and the Preda Code of conduct. Copyright Blackwell Publishing Ltd. 2004.