R. Barontini

The Effect of Family Control on Firm Value and Performance. Evidence from Continental Europe

We investigate the relation between ownership structure and firm performance in Continental Europe, using data from 675 publicly traded corporations in 11 countries. Although family-controlled corporations exhibit larger separation between control and cash-flow rights, our results do not support the hypothesis that family control hampers firm performance. Valuation and operating performance are significantly higher in founder-controlled corporations and in corporations controlled by descendants who sit on the board as non-executive directors. When a descendant takes the position of CEO, family-controlled companies are not statistically distinguishable from non-family firms in terms of valuation and performance.

Directors' Remuneration Before and after the Crisis: Measuring the Impact of Reforms in Europe

In this paper we measure the impact of recent reforms on directors’ remuneration by comparing the remuneration practices at large European listed companies before and after the financial crisis. We analyse the data concerning directors’ remuneration at FTSE Eurofirst 300 Index companies and assess to what extent the changes occurred between 2007 and 2010 reflect the economic crisis determined by the 2008 financial turmoil and the remuneration reforms generated by the same. Our analysis reveals that country-specific characteristics such as corporate governance, firm ownership, and the nature and quality of the legal system still have a relevant impact on the level and structure of directors’ pay.Section I briefly connects our work with previous studies in this area, while section II introduces some core aspects of recent EU and national reforms. In section III, we analyse the data concerning remuneration governance and disclosure, and show that all firms have experienced improvements. However, variations persist reflecting national regulations and practices. Moreover, companies with more dispersed ownership tend to comply better with remuneration governance and disclosure requirements. Our data confirm and extend to Europe theoretical predictions and previous country-specific empirical evidence about the impact of ownership concentration on remuneration governance and disclosure. In section IV, we analyse pay structure and levels. We measure the level of total compensation, the variable component including the estimated value of annual stock grants and stock options. The evolution of total compensation between 2007 and 2010 reveals that pay practices are permeable to the effect of the financial crisis. Board total compensation decreases in most European countries. However, significant differences emerge between financial and non-financial companies, with board compensation at financial firms decreasing rather significantly, while non-financial firms experience less relevant changes. Also the CEO compensation level and structure significantly changed in 2010 relative to 2007, mainly as a result of the reduction in variable cash compensation. This is partly due to the negative performance of firms in 2010. However, our results show that these changes may be also related to other factors, in particular the regulatory pressure on financial firms in the relevant period. Indeed, several items in the pay structure of financial firms go in the direction indicated by regulators, i.e. better focus on the risk implications of pay, appropriate balance between variable and fixed compensation, and a substantial portion of variable compensation awarded in shares or share-linked instruments. Section V concludes by advancing some policy suggestions.

Models of performance and value measurement in service systems

The emergence of service science offers new and renewed research interest to management accounting and to performance management. In terms of management accounting, the prospects of cocreation of value and servitisation lead towards analysis objectives that consider the customer to a greater extent. Secondly, the trend of dissociation between investments (costs) and sources of revenues questions the validity of the traditional logic of costing for pricing in the context of service science. In short, problems of cost and revenue allocation emerge between coproducing partners in a service system. In terms of performance management, the development of business models in which the relevance of the service component increases requires reflection on which innovative techniques should be used to measure value, also with a view to establishing incentive systems oriented towards value creation.

Firm Growth and Legal Environment

An effective country‐level legal environment is crucial for promoting access to finance, development, and ultimately economic growth. Based on a sample of large companies listed in Continental Europe in the period 2002–2011, this study suggests that investor protection level is related to firm growth. Specifically, investor protection: a) enhances the growth rate of the firm; b) affects growth sensitivity to leverage and cash flow. These results provide empirical support to recommendations by policy makers advocating for increased investor protection in Europe.

Modelli di misurazione della performance e del valore nel sistema dei servizi

L’emergere della scienza dei servizi offre nuovi e rinnovati interessi di ricerca al management accounting ed al performance management. Sul versante del management accounting, le prospettive della co-creazione di valore e della servitization spingono verso oggetti di analisi che considerano maggiormente il cliente. Secondariamente la tendenziale dissociazione tra investimenti (costi) e fonti dei ricavi mette in dubbio la validita della tradizionale logica del costing for pricing nel contesta della service science. Infine si assiste ad una crescente problematicita nella ripartizione dei costi e dei ricavi tra partner co-produttori in un sistema di servizi. Sul versante del performance management lo sviluppo di modelli di business nei quali cresce l’importanza della componente di servizi impone una riflessione su quali tecniche innovative di misurazione del valore possano essere appropriate, anche nella prospettiva di definire sistemi di incentivazione orientati alla creazione del valore.