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Interlocking directorates and concentration in the Italian insurance market

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  • Canofari Paolo
  • Di Bartolomeo Giovanni

Abstract

The Italian insurance market represents a peculiar and puzzling case within the European Single Market. Since the radical deregulation process in 1992, standard indicators have shown a low degree of market concentration. However, at the same time, Italian insurance costs still remain among the highest in Europe due to the existence of widespread collusive practices, which have been largely documented by both the Italian Antitrust Authority and empirical evidence. The main channel of anti-competitive behavior seems to be related to the exchange of information. To improve the understanding of its structure, our paper studies interlocking linkages among firms operating in the Italian insurance market. Interlock linkages are apparent when single directors sit on more than one company’s board. Thus, interlock linkages can be viewed as a systemic channel of information exchange and a potential source of collusive practices. We distinguish interlock linkages occurring within and between groups operating under a common ownership because companies operating in the insurance sector may be organized in multi-brand holdings. Therefore, we disentangle interlocking directorates as holding business strategies from systemic structures that might represent potential threats for the market competition. Copyright Springer Science+Business Media New York 2015
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  • Canofari Paolo & Di Bartolomeo Giovanni, 2015. "Interlocking directorates and concentration in the Italian insurance market," wp.comunite 0115, Department of Communication, University of Teramo.
  • Handle: RePEc:ter:wpaper:0115
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    File URL: http://wp.comunite.it/data/wp_no_115_2015.pdf
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    References listed on IDEAS

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    1. Renee B. Adams & Benjamin E. Hermalin & Michael S. Weisbach, 2010. "The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 58-107, March.
    2. Carlos Drago & Francesco Millo & Roberto Ricciuti & Paolo Santella, 2011. "Corporate Governance Reforms, Interlocking Directorship Networks and Company Value in Italy (1998-2007)," CESifo Working Paper Series 3322, CESifo Group Munich.
    3. Francis Kramarz & David Thesmar, 2013. "Social Networks In The Boardroom," Journal of the European Economic Association, European Economic Association, vol. 11(4), pages 780-807, August.
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    5. Born, Patricia H, 2001. "Insurer Profitability in Different Regulatory and Legal Environments," Journal of Regulatory Economics, Springer, vol. 19(3), pages 211-237, July.
    6. Donatella Porrini, 2004. "Information Exchange as Collusive Behaviour: Evidence from an Antitrust Intervention in the Italian Insurance Market," The Geneva Papers on Risk and Insurance, The International Association for the Study of Insurance Economics, vol. 29(2), pages 219-233, April.
    7. Giuseppe Turchetti & Cinzia Daraio, 2004. "How Deregulation Shapes Market Structure and Industry Efficiency: The Case of the Italian Motor Insurance Industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 29(2), pages 202-218, April.
    8. Rüdiger Fahlenbrach & Angie Low & René M. Stulz, 2010. "The Dark Side of Outside Directors: Do they Quit When They are Most Needed?," Swiss Finance Institute Research Paper Series 10-17, Swiss Finance Institute.
    9. repec:ucp:bkecon:9780226531083 is not listed on IDEAS
    10. Hallock, Kevin F., 1997. "Reciprocally Interlocking Boards of Directors and Executive Compensation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 32(03), pages 331-344, September.
    11. Carbonai Davide & Di Bartolomeo Giovanni, 2006. "Interlocking directorates as a trust substitute: The case of the Italian non-life insurance industry," wp.comunite 0001, Department of Communication, University of Teramo.
    12. Dooley, Peter C, 1969. "The Interlocking Directorate," American Economic Review, American Economic Association, vol. 59(3), pages 314-323, June.
    13. Paolo Coccorese, 2010. "Information Exchange as a Means of Collusion: The Case of the Italian Car Insurance Market," Journal of Industry, Competition and Trade, Springer, vol. 10(1), pages 55-70, March.
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    1. repec:kap:jincot:v:18:y:2018:i:1:d:10.1007_s10842-017-0250-7 is not listed on IDEAS

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