Corporate governance and control in italian family business: an empirical analysis

In recent decades, the importance of the role played by corporate governance has become ever more apparent. The control exercised by the various corporate bodies has assumed considerable importance, especially following the various financial scandals of the last few years. In this article, we are going to analyze how control is exercised within the family firm, which, because of the composition of the capital, has particular characteristics. We examined family businesses because, even if they are present all over the world, they are the most common form in Italy. In fact, in our country, the percentage of family businesses is as high as 85%. The literature (Montemerlo, 2000; and Gubitta and Gianecchini, 2002) reveals that both in large family businesses, where there is an evident managerial structure, and in small family businesses, where the entrepreneur is the one and only manager, control is exercised by the family. In this context, the board of directors plays a vital role. In a situation of growing separation between ownership and management, the board is the body responsible for meeting first shareholder expectations and second those of all other stakeholders. It follows from the above that in family-controlled firms, governance and control are influenced by the structure of the company and by family dynamics. The presence of an entity such as the board of directors that is more independent and that consists of several committees is the best solution to ensure business continuity. In this article we will also analyze all further organs that a family business uses to comply fully with controls. The study takes the form of an empirical analysis in which we look at the differing roles of boards of directors in Italian family businesses, dividing the sample into small-medium companies and large listed companies. The analysis is qualitative and is based on interviews and corporate governance documents. The main goal of our work is to compare the results of our analysis with the discussion in the literature, in an effort to shed light on the different roles of the board of directors in the companies analyzed, to delineate the prototype of the member of the board and the various tasks and goals of the board, and then to look for the presence of other control bodies that could ensure the best management and administration of the company