Marcello Bianchi, Angela Ciavarella, Luca Enriques, Valerio Novembre, Rossella Signoretti Regulation and self-regulation of related party transactions in Italy: An empirical analysis (01 Mar 2014) Available at ECGI: https://ecgi.global/working-paper/regulation-and-self-regulation-related-party-transactions-italy-empirical-analysis
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.
Although controlling shareholder agency problems have been well studied so far, many questions still remain unanswered. In particular, an important puzzle in “bad-law” jurisdictions is: why some controlling shareholders (“roving controllers”)...Read more
This paper is the introductory chapter of Luca Enriques and Tobias Tröger (eds.), The Law and Finance of Related Party Transactions (Cambridge University Press: forthcoming). Its goal is to sketch out the individual chapters’ contributions to the...Read more
Preemptive rights are thought to protect minority shareholders from cheap-stock tunneling by a controlling shareholder. We show that preemptive rights, while making cheap-stock tunneling more difficult, cannot prevent it when asymmetric...Read more
In the wake of the corporate scandals of the early 2000s, Italian policymakers tackled tunnelling via related party transactions (RPTs) by enacting a three-layer regime: a statute setting the goals of a regulation (transparency, and substantial...Read more