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

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  • Volpin, Paolo

Abstract

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.

Suggested Citation

  • Volpin, Paolo, 2002. "Governance with Poor Investor Protection: Evidence from Top Executive Turnover in Italy," CEPR Discussion Papers 3229, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3229
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    References listed on IDEAS

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    More about this item

    Keywords

    corporate governance; executive turnover; pyramidal groups;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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