On Corporate Governance in Italy: Issues, Facts and Agenda

Abstract

Drawing on recent theories of control allocation and on the results of a farsearching empirical research project, Italian corporate governance is analyzed and interpreted. With control oriented financial institutions, takeovers and fiduciary duties lacking, separation between ownership and control is guaranteed by a mix of state ownership, pyramidal groups and implicit rules, namely family relations and coalitions among owners sharing common interests or values. The results are shown to be a limited degree of separation, a high stability of control, which spurs entrepreneurs' commitment and investments, and obstacles to the mobility of control, which hamper growth and restructuring and limit people's opportunities. An interpretation is provided of why the disadvantages have outweighed the advantages only since the end of the '60s and why small companies have succeeded in overcoming some of the drawbacks better than large companies. The first tentative steps to reform the system are assessed.

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