Corporate governance, board of directors and company performance in Italy

Corporate governance (CG) can be broadly defined as the processes and relations by which firms are administrated. The first definition of CG is provided by Prowse (1998): “CG is rules, standards and organizations in an economy that govern the behaviour of corporate owners, directors, and managers and define their duties and accountability to outside investors, i.e., shareholders and lenders”. More recently, the OECD gives us a more detailed definition of CG: "CG involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. CG also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined" (OECD, 2004; 2015a). To sum up, CG practices deal with the allocation of rights and among the different agents in the companies (e. g. board of directors, executive managers, shareholders) and delineate rules and procedures for decision-making which affect stakeholders’ interests. In order to appreciate the peculiarities of Italian CG, it is important to outline the economic environment, as well as the legal environment, in which firms and their management characteristics have evolved.