Regulation and Self-Regulation of Related Party Transactions in Italy. An Empirical Analysis

41 Pages Posted: 24 Jan 2014 Last revised: 1 Aug 2014

See all articles by Marcello Bianchi

Marcello Bianchi

Assonime

Angela Ciavarella

CONSOB

Luca Enriques

University of Oxford Faculty of Law; European Corporate Governance Institute (ECGI)

Valerio Novembre

CONSOB

Rossella Signoretti

CONSOB

Date Written: January 20, 2014

Abstract

This paper assesses how Italian companies have implemented the regulation on related party transactions enacted by Consob in 2010. Companies have been given some degree of freedom in devising their internal codes: they may “opt-up” or “opt-down” from some of the default provisions set forth in the regulation, thus tailoring internal codes to their own individual needs. We investigate how firms have made use of these options, building an ad hoc firm-specific indicator which focuses on five key provisions. We find that the options we focus on have been taken advantage of in a variety of ways. We also verify the hypothesis that firms adopt stricter/looser procedures depending on corporate governance characteristics. While non-controlled firms seem to have set up stricter procedures, among controlled-companies those where a single shareholder or a coalition holds a stake lower than 50% of voting and cash flow rights have weaker procedures. Finally, while a higher presence of independent directors does not seem to play a role, the presence of a director nominated by institutional investors is positively correlated with stricter procedures.

Keywords: related party transactions, corporate governance, tunneling.

JEL Classification: G30, G34, K220, L510.

Suggested Citation

Bianchi, Marcello and Ciavarella, Angela and Enriques, Luca and Novembre, Valerio and Signoretti, Rossella, Regulation and Self-Regulation of Related Party Transactions in Italy. An Empirical Analysis (January 20, 2014). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 415/2014; CONSOB Working Papers No. 75. Available at SSRN: https://ssrn.com/abstract=2383237 or http://dx.doi.org/10.2139/ssrn.2383237

Marcello Bianchi

Assonime ( email )

Piazza venezia
Roma 00198
Italy

Angela Ciavarella (Contact Author)

CONSOB ( email )

Roma 00198
Italy

Luca Enriques

University of Oxford Faculty of Law ( email )

St Cross Building
St Cross Road
Oxford, OX1 3UL
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http:/www.ecgi.org

Valerio Novembre

CONSOB ( email )

Via G.B. Martini 3
Roma, 00198
Italy
+39068477297 (Phone)

Rossella Signoretti

CONSOB ( email )

Roma 00198
Italy

Register to save articles to
your library

Register

Paper statistics

Downloads
450
Abstract Views
2,069
rank
63,243
PlumX Metrics