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Governance with poor investor protection: evidence from top executive turnover in Italy

  • Volpin, Paolo F.

This Paper studies the determinants of executive turnover and firm valuation as a function of ownership and control structure in Italy, a country that features low legal protection for investors, firms with controlling shareholders, and pyramidal groups. The results suggest that there is poor governance, as measured by a low sensitivity of turnover to performance and a low Q ratio, when (i) the controlling shareholders are also top executives, (ii) the control is fully in the hands of one shareholder and is not shared by a set of core shareholders, and (iii) the controlling shareholders own less than 50% of the firm’s cash-flow rights.

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Article provided by Elsevier in its journal Journal of Financial Economics.

Volume (Year): 64 (2002)
Issue (Month): 1 (April)
Pages: 61-90

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Handle: RePEc:eee:jfinec:v:64:y:2002:i:1:p:61-90
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505576

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