Italy

The chapter aims to describe the evolution of corporate governance in Italy by analyzing the historical, legal, and regulatory changes that have shaped the governance system of Italian companies, focusing on protecting minority investors and the structure of ownership and control. The research is based on a systematic literature review and Italian legislation, including the Corporate Governance Code and corporate law reforms. The study addresses the evolution of the Italian economic system, the capital market’s characteristics, financing sources, conflicts of interest, the role of minority shareholders, the structure of the board of directors, and the external audit system. Corporate governance in Italy is characterized by a high concentration of ownership, often in the hands of families or the State, and using mechanisms that widen the divergence between ownership and control. Despite recent reforms, such as the Draghi Law (1998) and the Corporate Governance Code, which adopted the “comply or explain” approach, protecting minority shareholders remains challenging. The predominant governance structure is the traditional model, with a board of directors and a supervisory board, while alternative models (monistic and dualistic) are rare. The involvement of institutional investors has grown but remains limited. The research also highlights the importance of director independence and external audit for the quality of governance, although mandatory audit firm rotation has not shown significant impacts on audit quality. Corporate governance in Italy has evolved significantly but still faces challenges related to ownership concentration and the protection of minority shareholders. The adoption of international practices and greater participation of institutional investors are important steps. Still, cultural change and experimentation with new governance models are necessary to improve the system’s effectiveness.