Even though the financial literature has examined the relation between the composition of the board of directors and firms’ performances, few studies have investigated the effect of adopting a specific corporate governance system. Past studies have not found clear evidence of the superiority of a specific corporate governance system in terms of economic and financial performances; instead, they have generally been limited to legal systems where the adoption of a specific system is mandatory. In this paper, we take into consideration the case of the Italian Corporate Law Reform, which gives firms the opportunity to choose, in a non-mandatory way, between different governance systems and in particular between a one-tier model and the pre-existing system prior to the Reform. Using propensity score matching and focusing on a sample of unlisted Italian joint-stock companies, we found evidence of a significant worsening of performances from 2003 to 2013 for corporations adopting a one-tier board after the Reform.
Small Business Economics – Springer Journals
Published: Jun 27, 2016
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