Alternative vs Traditional Corporate Governance Systems in Italy: An Empirical Analysis

The 2003 Italian Corporate Reform Law, establishing one-tier vs two-tier board for listed and unlisted joint stock companies, introduced an alternative corporate governance system. This study implements probit regressions in order to compare 548 unlisted firms: corporations with better performance in sales and capital structure, as well as those subject to control and coordination , maintain a traditional system. Conversely, firms with a high proportion of individual shareholders adopt alternative systems. For alternative systems' firms, split between one-tier and two-tier boards, companies subjected to control and coordination action tend to implement a one-tier system, same as firms with a higher proportion of individual shareholders.