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Governance with Poor Investor Protection: Evidence from Top Executive Turnover in Italy

  • Volpin, Paolo

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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3229.

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Date of creation: Feb 2002
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Handle: RePEc:cpr:ceprdp:3229
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