The minority directors in the corporate governance of EU listed institutions: A chimaera or a possibility?

Abstract

The analysis of the category of minority directors is discussed in this article in an ambitious undertaking. This niche body of directors, a classification present in very few jurisdictions across the world, is discussed against the backdrop of a legal framework – Italy – where it has been codified for quite some time. Italy then will be the starting point of a legislative expedition which will firstly encounter the shores of a comparator, the United Kingdom, and its local system of corporate governance, before ultimately reaching its journey’s end in Brussels, and its legal framework of corporate governance addressed to listed companies. Based on the findings of this doctrinal analysis, it is suggested that the notion of minority directors as public safe-keepers, albeit exclusively confined to listed companies, could spearhead the agenda of the EU legislature and is a device fit for transplantation across the different corporate law frameworks, first and foremost the British one. Ultimately, through a speculative reference to the notion of ‘board diversity’ and the literature sprouted on this concept, the Italian voting list model is discussed as a means of adding both value to listed entities and efficiency to the relevant boards.

The relationship between minority directors and earnings management: an empirical analysis in the Italian institutional setting

“…Significance at à 0.10; Ãà 0.5; ÃÃà 0.001. §As the purpose of this models is to test an association in the field of earnings management studies, rather than explaining observed variation or predicting of future values, the rather low R^2 does not represent an issue (Breiman, 2001;Lukacs et al, 2010;Kliestik et al, 2021) board of directors (De Poli and De Gioia Carabellese, 2017), we examine the relationship between minority directors and the quality of accounting numbers as proxied by the magnitude of abnormal working capital accruals for a sample of Italian listed firms.…”

“…However, in the Past 15 years, major reforms have been implemented in Italy to improve the quality of investor protection (Enriques, 2009; Belcredi and Enriques, 2014). In this context, slate-voting is a peculiar feature of current Italian corporate governance regulations that gives minority shareholders the right to appoint at least one member of the board of directors (De Poli and De Gioia Carabellese, 2017; Bianchi et al , 2018). In this regard, Italian corporate legislation has been characterized by two main developments: the Privatization Act 1994 (Law n. 474/94) and the Savings Act 2005 (Law n. 262/2005).…”

“…As the slate voting system is a peculiar feature of the current Italian corporate governance regulation that gives minority shareholders the right to appoint at least one member of the board of directors (De Poli and De Gioia Carabellese, 2017), we examine the relationship between minority directors and the quality of accounting numbers as proxied by the magnitude of abnormal working capital accruals for a sample of Italian listed firms.…”

All that glitters is not gold! Independent directors' attributes and earnings quality: Beyond formal independence

“…Furthermore, there are a few peculiarities of the governance system in Italy. According to the Italian TUF (financial markets functioning regulation), minority shareholders are entitled to take part in enterprise management (De Poli & de Gioia Carabellese, 2017). Granting minority shareholders the right to appoint at least one member of the board of directors surely represents an important step towards a more effective protection of outside investors' interests (Malberti & Sironi, 2007; Moscariello et al, 2019).…”

“…Furthermore, there are a few peculiarities of the governance system in Italy. According to the Italian TUF (financial markets functioning regulation), minority shareholders are entitled to take part in enterprise management (De Poli & de Gioia Carabellese, 2017).…”