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Emiliano Di Carlo, Francesco Ranalli



The paper focuses on listed companies controlled by other (listed or not listed) entities. The decisionmaking power of listed subsidiary’s boards could be strongly influenced by (or instead could be autonomous from) the parent companies’ board. However, so far literature on corporate governance seems not to have considered adequately this aspect as well as the impact of that influence on listed companies’ financial performance and on corporate governance variables. The main objective of this paper is to explore how and why this phenomenon is relevant, giving some preliminary suggestions on the interpretation of the ownership structure, board demography and the financial performances of directed listed subsidiaries. In order to explore the relevance of the phenomenon, we use a sample of Italian listed companies controlled and consolidated by other companies for the year 2010. The analysis shows that 71.4% (145 firms) of Italian non-financial listed companies are consolidated by the respective controlling entities and 24.1% (35 firms) of these listed subsidiaries declare to be directed by their parents. Thus, they are not independent economic entities and the effort to study the relationship between corporate governance variables and firm performance could be strongly biased.

Keywords: Business Group, Firm’s Performance, Italy, Subsidiary Board

How to cite this paper: Di Carlo, E., & Ranalli, F. (2013). Corporate performance and boards’ dilemma of listed subsidiaries. Corporate Ownership & Control, 10(4), 130-147.