List Voting’s Travels: The Importance of Being Independent in the Boardroom

Abstract

The life of the law, especially with regard to corporations, is strongly influenced by experience and practice. The board, a living element of corporate law, is therefore one of the most noteworthy aspects to be studied, given its relevant implications and role as the lifeblood of scholarly debates.

This Article offers a novel contribution to the assessment of list voting, a fairly unique Italian system that has been increasingly appreciated by institutional investors. A hand-picked dataset that stretches from 2005 to 2015 shows a positive correlation between minority-appointed directors in the boardroom and dividend payouts. Furthermore, the findings shed light on the practice of appointing independent directors based on slates proposed by the minority of shareholders and provide evidence that list voting works, not only in closely-held corporations, but also on a global scale, despite the previous scholarship that argues that list voting makes more sense in concentrated ownership scenarios. Although the empirical analysis focuses on the Italian case, the insight gained in this analysis regarding the effectiveness of list voting is also useful for other jurisdictions.

Keywords: corporate governance, board of directors, independent directors, minority-appointed directors, enhanced-independent directors, slate voting, list voting, dividend payouts, directors' elections, institutional investors, controlled companies

JEL Classification: K22, G3, G23, G28