7 - Italy

Summary

In this chapter, we portray the evolution of the ownership and control structure of Italian firms over a period – from early 1990s to date – in which institutional changes, external shocks and reforms affected the economy, the financial system and the legal protection of shareholders. Specifically, we provide a detailed account of the organization forms of Italian companies, the control models of listed and unlisted firms, the identity of the largest shareholder, the role of institutional investors and the control-enhancing mechanisms of family listed firms, which still represent the largest share in the private companies’ segment of the stock exchange.

We find that many features of the ownership structure and the control models are still in place. Italian economy remains characterized by a predominance of SME that rely on banks for external finance, family firms reluctant to go public and release control, high ownership concentration, even among listed firms.

And yet institutional reforms did change the corporate governance system, the transparency and the attitude towards minority investors as pressures from the regulatory authorities led pyramidal groups to shorten the control chains and to dismantle cross-shareholdings, all of which eventually sparked a deep interest by foreign institutional investors in recent years.