Governance and Financial Structure of Unlisted Firms in Italy

In this paper, we analyse the main characteristics of the ownership structures, control models and the reporting systems of unlisted Italian companies, using the results of a corporate governance survey of 834 Italian firms that are clients of the UniCredit Banca d'Impresa. The data, which is consistent with earlier studies, confirms some distinctive features of Italian companies: ownership is highly concentrated, with individual and family control models in place in the vast majority of cases, while companies tend to be closed to external shareholders. Our analysis also shows that relatively informal corporate governance systems - where the rules are rarely codified, and there are few external control mechanisms - are widespread. In the second part of the paper, we analyse the relationship between the levels of complexity of corporate governance procedures and the sources of funding used by companies. In particular, we examine the relationship between ownership structures, control models and governance rules on the one hand, and companies' financial structures and access to a variety of funding sources on the other. Matching survey data with the commercial data of the bank, it emerges that more open companies (with external investors, independent managers or independent directors and greater transparency in financial disclosure) also tend to have a more rigorous financial structure, with higher capitalisation, greater balance in the term structure of assets and liabilities and less use of the owner's personal assets to support the company's debt.