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Abstract:
The paper analyzes the optimal structure of the board of directors in a firm with ownership concentrated in the hands of a large shareholder who sits on the board. We focus our attention on the choice between a one-tier board that performs all tasks and a two-tier board where the management board is in charge of project selection and the supervisory board is in charge of monitoring. We consider the case in which the large shareholder sits on (and controls) the supervisory board but not the management board. We show that a two-tier structure can limit the interference of large shareholders and can restore the manager's incentive to exert effort to become informed on new investment projects without reducing the large shareholder's incentive to monitor the manager. This results in higher expected profits in a two-tier board than in a one-tier board and the difference in profits can be sufficiently high to induce large shareholders to prefer a two-tier board despite the fact that in this case the manager selects his preferred projects rather than the project preferred by large shareholders. The paper has interesting policy implications since it suggests that two-tier boards can be a valuable option in Continental Europe where ownership structure is concentrated. It also offers support to some recent corporate governance reforms, like the so-called Vietti reform in Italy, that have introduced the possibility to choose between one-tier and two-tier structure of boards for listed firms.

Board of directors, Dual board, Corporate governance, Monitoring, Project choice

Abstract:
This paper studies the turnover of board of directors members in a sample of 72 companies listed on the Milan Stock Exchange during the period 1988-1996. We investigate whether board members change more frequently when company performance is poor, as the literature suggests, and whether and how the ownership structure of Italian companies affects these relationships. We find that there is a statistically significant and negative relationship between firm performance and CEO turnover and that this relationship depends on the ownership structure of firms. Turnover is lower in family controlled firms and higher in firms that experienced a change in the controlling shareholder. The latter firms also have a stronger turnover-performance relationship. We find evidence supporting the hypothesis that changes in control are an extreme form of turnover. We also find evidence of a monitoring role of the second largest shareholder. Also the turnover of top executives exhibits a negative relationship with performance. Board turnover instead is unrelated to performance but is related to the firm's ownership structure. Overall our findings suggest that the characteristics of the Italian economy deeply affect the turnover of directors and have implications that go beyond the specific case study.

Abstract:
This paper analyses the turnover of board of directors members on a sample of companies listed on the Milan Stock Exchange in the period 1988-1996. Our aim is to investigate if board members change more frequently when company performance is poor, as the literature suggests, if this relationship is similar for C.E.O.s and other board members, and if and how the ownership structure of Italian companies affects these relationships. We use three different measures of board of directors turnovers: turnover A is the turnover of all board members; turnover B is the turnover of the President, Vice-President, C.E.O. and General Manager; finally turnover C is the turnover of C.E.O.s only. We find that changes in ownership affect turnover and that the relationship between turnover and performance is stronger in companies that have experienced a change in the controlling shareholder.

Board of Directors, Corporate governance, Financial agency

Abstract:
We analyze top executives turnover in Italian Banks in the period 1993-2002. We relate executive's turnover to bank performance as measured by return on equity and non performing loans, and to local connections of the manager, controlling for other bank and manager characteristics. We classify banks in two groups according to their voting mechanisms. The first group, joint stock company banks, includes all banks (Commercial and Saving and Loans) with voting mechanism based on the number of shares owned. The second group includes all cooperative banks that have a per capita voting mechanism: Mutual, Rural and Cooperative banks.

First, we consider OLS regressions with and without bank fixed effects, and managers fixed effects. We find that top executive turnover is affected by bank organizational form. President and General Manager turnover are negatively related to return on equity in joint stock company banks, while in cooperative banks they are related to both performance variables. CEO turnover, which we observe only in the first group of banks, is ambiguously related to bank performance. Top executives in all types of banks are strongly locally connected. The relationship between local connections and turnover depends on the category of banks. In the banks chartered as Joint Stock Company only the turnover of the president is negatively related to connections, while for the Mutual, Rural and Cooperative Banks the turnover of both President and General Director is negatively related to connections. Consistently with previous literature we find that turnover is higher in banks affiliated to a group. Finally for both groups of banks and for all positions the presence of a contemporaneous episode of turnover in the same bank increases the likelihood of turnover, thus suggesting that a discipline mechanism is at work.

Then, we construct a measure of managers' tenure and we look at the probability of turnover conditional on tenure. We find that the probability of turnover increases with tenure for all positions and all types of banks, and that, for a given performance, the hazard function is lower the higher the degree of connections.

Corporate Governance, Executive Turnover, Banking

Abstract:
We study top executive turnover in Italian Banks for the period 1993-2001. We relate the probability of survival of top executives (President, CEO, General Manager) to bank performance and local connections of the manager, controlling for (observable and unobservable) bank and manager characteristics by exploiting longitudinal information on bank-manager appointments. We measure the degree of local connections of managers by the distance between the province of the bank headquarter and the province of birth of the manager, so that higher distance implies lower connections. We show that top managers of Italian banks tend to be local in the sense that the distribution of the distance is heavily skewed towards zero. Moving from this evidence, we address two questions. First, we investigate whether connections affect the duration of the appointment at bank. Second, we ask whether connections entrench managers at the expense of bank performance. We find that connections generally increase survival probabilities at bank and that the positive effect of performance (which has been largely documented by executive turnover literature) is weakened once connections are accounted for. We find only very weak evidence in favour of the hypothesis that managerial connections contain valuable information to help bank performance. Our evidence instead points in the direction that connections are a collusion device to maintain and share rents and lower the probability of survival of the bank. Consistently with this we find that the only ones to benefit from connections are the top managers themselves whose survival probability (for Presidents and General Managers) significantly increases with connections.

Corporate Governance, Executive Turnover, Commercial and Cooperative banks

Abstract:
The following paper aims at studying the competitive effect of the entry in the gas market of importers of liquefied natural gas (LNG hereafter). In particular we would like to analyze whether the construction of LNG terminals and the entry of LNG importers can have a positive effect on the gas price and therefore on consumers' welfare. The present paper formalizes some plausible scenarios for the gas market in the next years and studies the resulting prices. It will then turn to an empirical analysis in order to see which of the assumed scenarios is more likely to emerge in these future years. The main result of the model is that entry of LNG importers in the market for natural gas can have a positive competitive effect even if LNG has higher total cost, but only under some stringent conditions. The main of them can be summarized as follows: new competitors must enter the LNG market; an active spot market should develop; LNG cost should decrease. The empirical analysis shows that these conditions are very likely to be fulfilled in the future.

Gas market, Cournot competition, entry

Abstract:
In this paper we study top executive turnover in Italian Banks over the period 1993-2001. We relate the probability of survival of top executives (Presidents, CEOs and General Managers) to bank performance and the manager's local connections, controlling for (observable and unobservable) bank and manager characteristics by exploiting longitudinal information on bank-manager appointments. We measure the extent of managers' local connections by the distance between the province of the bank's headquarters and the manager's province of birth. We show that top managers tend to be local in the sense that the distribution of this distance is heavily skewed towards zero. On the basis of this evidence, we address two questions. First, we investigate whether connections affect the duration of the appointment at the bank. Second, we ask whether connections entrench managers at the expense of the bank's performance. We find that connections generally increase the probabilities of managers surviving at their banks, and that the positive effect of performance on tenure (as amply documented by the executive turnover literature) disappears once connections are taken into account. On the other hand, we provide evidence against the hypothesis that managerial connections contain information valuable for enhancing a bank's performance. In particular, we find that highly connected boards cause the shorter survival of banks, and that those who benefit from connections are top managers themselves (mostly Presidents and General Managers). This suggests that connections may be collusion devices with which to maintain and share rents.

connections, executive turnover, commercial and cooperative banks