Giovanni Fiori

Corporate Social Responsibility and Firms Performance - An Analysis on Italian Listed Companies

Corporate social responsibility (CSR) is getting an increasingly important issue for economic agents all over the world, due to a new attention to all the aspects of firms activities and their relationships with stakeholders. Also in Italy, the number of firms that prepare voluntary corporate social responsibility (CSR) reports (e.g. sustainability reports, environmental reports, environmental and social reports or corporate social responsibility reports) is increasing. The purpose of this paper is to investigate the impact of the voluntary disclosure about Corporate Social Responsibility on firms stock prices of Italian listed companies in order to analyze if it can somehow contribute to increase the stock market prices. Our empirical analysis will test the relation, during a period of three years, between corporate social responsibility (CSR) reports and firms stock prices, considering a sample of Italian listed companies.

The Relation between Earnings Management Independent Directors and Audit Committee: A Study of Italian Listed Companies

The study investigates whether and how earnings management depends on board monitoring, focusing, in particular, on two aspects: the role of independent directors and the presence of an audit committee in the Italian context. Empirical evidence about the topic does not come to unique results. In fact, on the one hand, independent directors and audit committees, being independent on management influence, are able to better protect shareholders from managerial opportunism (Fama and Jensen, 1983, Weisbach, 1988; Rosenstein and Wyatt, 1990; Byrd and Hickman, 1992; McWilliams and Sen, 1997), but, on the other hand, outside independent directors do not necessarily produce a better performance (Bhagat and Black, 1999; Klein, 1998; Agrawal and Knoeber, 1996) because the boards are “controlled” by management having better information than outside independent directors (Berle and Means 1932; Mace 1971).The purpose of the paper is providing an evidence about the impact of independent directors and audit committee on earnings management of Italian listed companies during the period 2002-2007. A regression analysis statistically examines this correlation. Our dependent variable is an earnings management metric based on the modified Jones model (Dechow, 1995). The results suggest that both independent directors and the existence of an audit committee mitigate earnings management. Governance and control variables are considered in terms of CEO powers and companies size and profitability.

The Influence of Corporate Governance on the Adoption of The Integrated Report: A first Study on IIRC Pilot Programme

This chapter has three main aims. First, it discusses the concept of Integrated Report (IR) as a privileged instrument of companies’ voluntary disclosure practices that answers to the investors and regulators’ call for a greater focus on companies’ strategy, governance, future performance and risks, overcoming a great part of the traditional financial statement’s limitations. Second, it introduces key issues currently being debated relating to the IR Pilot Program and the main characteristics of the companies that decided to adhere to it. Finally, it shows some empirical first results about the corporate governance factors associated with the voluntary decision to prepare an Integrated Report according to the IR International Framework. In so doing the authors draw some conclusions about how Corporate Governance structure and mechanisms—such as legal environment, composition of the board of directors or ownership structure—are related to company’s disclosure policies and the decision to adopt Integrated Report.

Exploring the Effects of Corporate Governance on Voluntary Disclosure: An Explanatory Study on the Adoption of Integrated Report

Abstract Purpose The chapter builds on the literature of Agency and Signalling Theories to analyse the corporate governance factors associated with the voluntary decision to prepare an Integrated Report according to the International Framework promoted by the IIRC. Methodology/approach The chapter is based on the results of a probit regression run with regard to a sample of 35 companies that joined the Pilot Programme in 2011 and 137 similar companies that did not. Findings The analysis of two samples of European companies reveals that adhesion to the IR Pilot Programme is positively related to the gender diversity and size of the board. Research limitations Further research is required in order to study the differences between listed and non-listed companies in terms of variables affecting the adoption of the Framework and to increase the time range of our study. In addition, it would be interesting to include other variables capturing different aspects other than corporate governance, since the decision to join the Programme, as the results of our analysis have shown, may also be influenced by other factors, such as strategy decisions and communication policies. Originality/value The chapter adds to the existing literature by showing the main governance characteristics that impact the decision to adhere to the IR Pilot Programme. It is also important to the existing literature regarding the role played by gender diversity in corporate governance mechanisms and CSR policies.

What drives value relevance? The visibility effect in the adoption of a new accounting standard

This article contributes to the literature on the reasons that drive changes in financial information value relevance after the issuance and implementation of a new accounting standard. Currently, value relevance changes are explained through the lens of the reporting location literature, which points to the increased transparency of the reports as the main driver of value relevance increases. We empirically analyse the changes in the value relevance of other comprehensive income (OCI) after the issuance of IAS 1 Revised in continental Europe, and we discuss the role of visibility of accounting standards (the visibility effect) in explaining value relevance changes. We also test whether firm size and the regulatory quality of the country in which a company is listed drive the results. This study may be of interest to investors and standard setters, given the role that they play in increasing the environment of information. One of the implications of the visibility effect hypothesis is for standard setters to pay more attention to the way standards are communicated and made public to market participants.

Bank-Firm Relation Changes and Earnings Quality - An Analysis on Italian Small-Medium Sized Companies

In the last years banks and firms relationship in Italy has experienced deep changes due to a new revised national and international regulation and to an increasing globalization of economic environment. These evolutions imply a new bank-firm relationship with a deeper disclosure, in a perspective of partnership between them. In this scenario, Basel 1 and 2 accords have been contributing to revise bank-firm relationship, moreover in the specific perspective of small-medium sized firms. In Italy, the evolution of bank-firm relation has been also influenced by an intensive banking system restructuring process, characterized by big mergers and small local banks aggregations. This paper focuses on bank-firm relation impact on small-medium sized firms financial reporting quality. The analysis empirically examines some proxies for earnings quality for a sample of Italian small-medium sized firms over 10 years period. Earnings quality metrics are based on the relation between working capital accruals and cash flows, following Dechow and Dichev (2002) approach. Across these metrics we will perform a cross-sectional analysis on the relation between earnings quality and some variables regarding banks and firms governance, controlling for regulation changes and other variables such as size, sector etc.

THE IMPACT OF FAMILY CONTROL ON INVESTORS’ RISK AND PERFORMANCE OF ITALIAN LISTED COMPANIES

Agency costs, deriving from the separation between ownership and control, affect whatever company model. In case of firms with dispersed ownership (the public companies), the classic agency conflict regards the relation between shareholders and managers. In case of family firms the classic agency conflicts are mitigated thanks to reduced separation between ownership and control, but there are other types of agency conflicts, moreover between family shareholders and minority ones. This paper focuses on the relation between agency costs and ownership structure, in the specific perspective of minority shareholders, providing a first empirical evidence of the proposition that family ownership reduces the agency costs of equity and has a negative effect on the equity risk perceived by the market. The analysis statistically compares family and non-family firms, sorted from Italian listed companies, in any sector with a significant presence of family business, to get evidence of familys ownership impact on equity cost of capital.