The Mandatory Representation of Minority Shareholders on the Board of Directors of Italian Listed Corporations: An Empirical Analysis

42 Pages Posted: 27 Feb 2007

See all articles by Corrado Malberti

Corrado Malberti

University of Trento - Faculty of Law

Emiliano Sironi

Bocconi University - Department of Economics; Catholic University of the Sacred Heart of Milan - Department of Statistical Sciences

Abstract

At the end of 2005 the Italian legislator modified the rules on the appointment of the members of the board of directors of listed corporations. Now these legal entities are not free to design the appointment strategies of the members of the board, but it is mandatory for listed corporations to reserve at least one seat on this corporate body to persons not appointed by the majority or by the controlling shareholder.

In this paper we use some descriptive and regression analyses to investigate the situation of Italian listed corporations before and after the introduction of the mandatory representation of minority shareholders on the board of directors. We analyze data collected on December 31, 2005, few days before the enactment of the reform, and on December 31, 2006, one year after the enactment of the reform and six months before the end of the transitory period. Our goal is to investigate the characteristics of Italian listed corporations that implemented the representation of minority shareholders during the first twelve months of the transitory period that followed the enactment of this reform.

In particular, we study the relationship between the appointment on the board of directors of a representative of minority shareholders and the following explanatory variables: the percentage of non-executive members sitting on the board, a dummy variable that indicates whether the corporation examined is included in the S&P Mib Index, another dummy variable that indicates whether the corporation examined is a bank, the capitalization of the corporation, the number of the members of the board of directors and the existence of a single shareholder that owns more than the 50% of the shares of the corporation.

We conclude this study discussing the results of these analyses and examining the first reactions of Italian listed corporations to the 2005 reform of corporate governance.

Keywords: Corporate governance, director elections, board elections, European Union, EC company law, Italy, protection of minorities

JEL Classification: G3, K2, K22

Suggested Citation

Malberti, Corrado and Sironi, Emiliano and Sironi, Emiliano, The Mandatory Representation of Minority Shareholders on the Board of Directors of Italian Listed Corporations: An Empirical Analysis. Bocconi Legal Studies Research Paper No. 18, Available at SSRN: https://ssrn.com/abstract=965398 or http://dx.doi.org/10.2139/ssrn.965398

Corrado Malberti (Contact Author)

University of Trento - Faculty of Law ( email )

Italy

Emiliano Sironi

Catholic University of the Sacred Heart of Milan - Department of Statistical Sciences ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy
+39 02 58365365 (Phone)

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