The Choice of Alternative Corporate Governance Systems: Ownership Structures and Performance in Italian unlisted Firms in 2008

The 2003 Italian corporate law reform, which established one-tier and two-tier boards for listed and unlisted joint stock companies, introduced alternative corporate governance systems. In addition to the traditional model, which, at least in its basic features, continues to be used by the Italian legislator, the two “alternative” models of corporate governance generated by the 2003 reform differ in terms of their methods of appointment of managing and controlling bodies. Taking into account the surprisingly limited adoption of the new systems introduced by the reform after five years, this work implements regression analysis in order to compare the choice of corporate governance system in Italian unlisted firms: the corporations with best performances in terms of return of assets have continued to use the traditional system; moreover, firms with less concentrated ownership structure and the lowest proportion of individual shareholders have adopted a two-tier model. These findings support the preference of a two-tier board system for pyramidal structured companies hold by family groups.