The Eurozone crisis and Italian corporate governance: the end of blockholding?

Abstract

This article explains the process of change in domestic corporate governance. An actor-centred coalitional approach is applied to the Italian case to show how the main features of domestic corporate governance are a product of behavioural patterns (i.e. informal institutions), rather than formal legislation. Leveraging their superior financial means, business elites act as institutional incumbents shaping these informal institutions according to their preferences. It is argued that a change in corporate practices is more likely to be triggered by a socio-economic crisis, which weakens the domestic elite’s influence, rather than a legal reform. These findings call into question the excessively formalistic approach of many corporate governance scholars, and are confirmed by the Italian trajectory. After having resisted 20 years of liberalising legal reforms aimed at eroding their power, Italian blockholders are now being forced, as a consequence of the Eurozone sovereign debt crisis, to dismantle their cross-shareholding networks.

Keywords:

• Italy
• corporate governance
• legal reforms
• power resources
• interest coalitions

Acknowledgements

For his support all along the writing and reviewing of the article the author would like to thank Pepper D. Culpepper. He is grateful to Martina Cecino, Adrienne Héritier, Dermot McCann, Niels Selling, Harpal Singh Hungin, and Modern Italy’s two anonymous reviewers, for their helpful comments on earlier drafts.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. Stock data obtained from Borsa Italiana, http://www.borsaitaliana.it/azioni/azioni/azioni.htm. Accessed 17 September 2015.