Determinants of Intra-group Interlocking in European listed business groups

By | 2023-09-28T09:59:30+02:00 September 25th, 2023|

Emiliano Di Carlo, Lucrezia Fattobene, Marco Caiffa/ Financial Reporting / 1-2023

Purpose: The phenomenon of Interlocking Directorship within the same busi-ness group (the Intra-group Interlocks, IgI) has received little attention by scholars, especially when the interlocked affiliated-group companies are listed. Focusing on listed business groups, characterized by the presence of at least two affiliated-listed companies, and following the contingency perspective, this study aims to explore the determinants of IgI. Design/methodology/approach: The study analyses the controlling sharehold-er type (family, State, coalitions), the business ties, and the separation between ownership and control, focusing on 315 business groups listed in different Europe-an countries, i.e., Belgium, France, Greece, Italy, Spain, and Portugal. The social network analysis is applied to these groups, to compare the networks that originate from the corporate board of directors. Findings: In groups controlled by the State the density of social links is lower than in those controlled by families and coalitions. The strength of IgI is also relat-ed to the degree of correlation of firms’ industries, even if this correlation is influ-enced by the separation between ownership and control and by the country regula-tion that protects minority shareholders. Overall, the results show that for listed groups the agency theory better explains the determinants of the IgI phenomenon. Originality/value: This study contributes to the understanding of why board members of listed parent companies sit (or do not sit) in the listed subsidiary boards. Relying on agency theory and resource dependence theory, it also propos-es a theoretical framework.

 

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Determining characteristics of boards adopting Integrated Reporting

By | 2019-09-27T09:13:59+02:00 September 26th, 2019|

Alfiero Simona, Cane Massimo, Doronzo Ruggiero, Esposito Alfredo / Financial Reporting / 2-2018

Nowadays, companies and markets are increasingly international and growing numbers of stakeholders are affected by the economic, social and environmental aspects of business, resulting in significant changes in how corporate information is both perceived and published. Over the last few years, this new scenario has led to many company boards voluntarily adopting an accounting and company performance tool, known as Integrated Reporting (IR), which is a single disclosure document that satisfies stakeholders’ increasing need for communication. This study’s objective is to contribute to existing literature on the relationship between financial reporting and corporate governance, investigating into whether certain characteristics of the board – including numbers, gender, nationality, average age – influence the decision to adopt IR or not. The analysis was carried out on a sample of 120 Italian listed companies in different sectors for the year 2014. These results showed a positive relationship between the decision to use IR and the size of the board and the presence of female boardmembers, whereas the presence of foreign and older boardmembers had a negative effect on adopting IR.

integrated reporting, board of directors, diversity, logit

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Professione amministratori: interlocking directorship e qualità degli utili nelle imprese italiane quotate

By | 2017-12-29T17:34:29+01:00 December 27th, 2017|

Arena Claudia/ Financial Reporting, Riviste / Fascicolo: 2-2012

Al fine di aiutare a comprendere il ruolo rivestito dagli interlocking directorship nel contesto istituzionale italiano, il presente contributo ne analizza empiricamente l’influenza sulla qualità degli utili di bilancio. Adottando un campione di imprese italiane quotate tra il 2000 e il 2004, si rinviene che l’incidenza degli interlock nei CdA è negativamente correlata alla sostenibilità e alla value relevance dei valori di reddito. Tali risultati suggeriscono che la presenza di amministratori con incarichi multipli riduce il monitoraggio del CdA sul processo di redazione del bilancio, conducendo a valori contabili che non riflettono al meglio le performance economicofinanziarie dell’impresa. Questo studio contribuisce alla letteratura che annovera le caratteristiche di governance tra le determinanti del livello di trasparenza aziendale, al contempo fornendo evidenze utili per l’emanazione di future prescrizioni regolamentari.

This study explores the role of interlocking directorships among Italian listed companies, by looking at their influence on earnings quality. Examining a sample of firms over the period 2000-2004, the author finds that the incidence of ID on BoD is negatively related to the value relevance and the persistence of accounting earnings. This suggests that ID weakens the level of BoD’s monitoring on financial reporting process, thus leading to a lower earnings quality. These findings contribute to the lite- rature on the association between governance structures and accounting quality, at the same time providing evidence that could help regulators to further develop effective policy recommendations.

Keywords: interlocking directorship, board of directors, Italy, earnings quality

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Corporate governance and information asymmetry between shareholders and lenders: an analysis of Italian listed companies

By | 2017-12-22T14:35:12+01:00 December 22nd, 2017|

Pisano Sabrina, Lepore Luigi, Agrifoglio Rocco/ Financial Reporting, Riviste / Fascicolo: 2-2015

This paper analyzes the information asymmetry between owner/manager and lenders. More specifically, the research investigates the role of corporate governance mechanisms in reducing the agency costs of debt. The findings show that lenders perceive higher agency costs of debt if the controlling shareholder owns a percentage of capital greater than 66%. Results also show that the presence of independent directors elected by minority shareholders on the board mitigates the agency conflicts between borrowers and lenders. In the same way, the audit committee independence reduces the agency costs of debt. Moreover, the study shows that when the audit committee chairman coincides with the board chairman banks perceive more risk and, therefore, a bigger asymmetry. This coincidence increases the concentration of power in the hands of just one person and this enhances the likelihood of opportunistic actions by the management that could damage lenders. This means that it is costly for companies to concede to just one person too much influence over the board activities, because it reduces the effectiveness of the monitoring role played by independent directors, increasing the information asymmetry between borrowers and lenders.

Keywords: Agency costs of debt, board of directors, audit committee, ownership concentration

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