interlocking directorships and cross-shareholdings among italian blue chips

European Business Organization Law Reviewhttp://journals.cambridge.org/EBR

Additional services for European Business Organization Law Review:

Email alerts: Click hereSubscriptions: Click hereCommercial reprints: Click hereTerms of use : Click here

Interlocking Directorships and CrossShareholdings Among Italian Blue Chips

Carlo Drago, Stefano Manestra and Paolo Santella

European Business Organization Law Review / Volume 12 / Issue 04 / December 2011, pp 619 652DOI: 10.1017/S1566752911400045, Published online: 19 December 2011

Link to this article: http://journals.cambridge.org/abstract_S1566752911400045

How to cite this article:Carlo Drago, Stefano Manestra and Paolo Santella (2011). Interlocking Directorships and CrossShareholdings Among Italian Blue Chips. European Business Organization Law Review, 12, pp 619652 doi:10.1017/S1566752911400045

Request Permissions : Click here

Downloaded from http://journals.cambridge.org/EBR, IP address: 152.3.102.242 on 01 Mar 2013

European Business Organization Law Review 12: 619-652 619 © 2011 T.M.C.ASSER PRESS doi:10.1017/S1566752911400045

Interlocking Directorships and Cross-Shareholdings Among Italian Blue Chips

Carlo Drago, Stefano Manestra and Paolo Santella∗

1. Introduction: The role of interlocking directorates and ownership in corporate governance............................................................................... 620

2. Data and methodology ............................................................................. 623

3. The Italian director network..................................................................... 624

4. The two networks: comparing interlocking directorates and cross-ownership links........................................................................................ 629

4.1 The two networks in 1998 ....................................................................... 630 4.2 The two networks in 2008 ....................................................................... 632

5. Conclusion ............................................................................................... 636

Abstract We contribute to the literature on cross-shareholdings and board interlocks in Italy which finds possible evidence of enlarged collusion, that is, collusion established through board interlocks among companies that do not necessarily operate in the same business sector. We focus on Italian blue chips (about 80% of total market capitalisation) in 1998 and in 2008, examining the entire network of cross-share-holdings higher than 2% of total voting rights which we compare to the entire network of interlocking directorates among these blue chips. We find that in 1998 enlarged collusion only takes place among those blue chips that are also linked by cross-shareholdings (Mediobanca Galaxy), which reinforces the hypothesis that in Italy this form of collusion is functional to shareholder expropriation. In addition, we find that in 2008 new shareholders appear at the top of the Galaxy and the Galaxy extends its reach through board interlockers to the rest of the blue chips.

∗ Carlo Drago is at the University of Naples, Department of Mathematics and Statistics; Stefano Manestra and Paolo Santella are at Banca d’Italia. E-mail: [email protected]; stefano. [email protected]; [email protected]. The views expressed in the article represent exclusively the positions of the authors and in no way involve the responsibility of the Bank of Italy. We thank Livia Aliberti, Marcello Bianchi, Magda Bianco, Salvatore Chiri, Pierluigi Ciocca, Silvia Giacomelli, Nicola Pesaresi and an anonymous referee for the valuable comments received.

620 Drago, Manestra and Santella EBOR 12 (2011)

Keywords: corporate governance, interlocking directorships, antitrust, competition, Social Network Analysis (SNA), Exploratory Data Analysis (EDA), empirical corpo-rate finance.

1. INTRODUCTION: THE ROLE OF INTERLOCKING DIRECTORATES AND OWNERSHIP IN CORPORATE GOVERNANCE

The purpose of the present paper is to contribute to the literature on director and ownership interlocks by examining, comparing two years (1998 and 2008), the profile of the main board interlockers through whom the Italian director network is formed and by verifying to what extent director networks correspond to ownership networks.

There are several theories on the function of interlocking directorships. Mizruchi’s (1997) review on the topic illustrates three main reasons for the formation of interlocks: (i) cooptation and monitoring; (ii) collusion; (iii) legitimacy, career advancement and social cohesion. The first two groups of theories consider board interlocking as a means to pursue the interest of the firms involved: in the first case by increasing market efficiency, in the second case by pursuing the firms’ interest at the expense of market efficiency. The third group of theories considers interlocking not as a product of the interest of firms, but of the personal interest of the directors involved.

A first reason for the formation of interlocks is cooptation and monitoring (Dooley, 1969, and Mizruchi and Stearns, 1994). According to Selznick (1949), firms invite on their board representatives of the various resources they depend on to reduce environmental uncertainty and maintain their position in the market. For this reason, companies have on their boards bankers, suppliers and clients (Pfeffer and Salancik, 1978). As regards monitoring, interlocking is one of those institutions that can help surmount information asymmetry by offering access to internal information (Mariolis, 1975), especially for banks. Dooley (1969) finds that less solvent firms are likely to be interlocked with banks. Later studies also report that firms with high debt-to-equity ratios (Pfeffer, 1972) or organisations with an increased demand for capital (Mizruchi and Stearns, 1988) have a higher tendency to interlock their boards.

As for the second reason, interlocking would facilitate collusion between firms, creating an informal communication channel between directors that could allow companies to make agreements against consumers. The extensive debate started in the early twentieth century, when the US Senate Pujo Committee argued that interlocks between competitors provided a means of restricting competition. This translated into Section 8 of the Clayton Act of 1918 which expressly prohibited interlocks between firms competing in the same markets. In the European Union, Article 101 of the Treaty on the Functioning of the European Union is aimed at prohibiting cooperation between independent undertakings which prevents, restricts or distorts competition (Whish, 2009). Pennings (1980) found a positive association

Interlocking Directorships and Cross-Shareholdings in Italy 621

between industry concentration and horizontal ties (interlocking directors between firms operating in the same sector), while Burt (1983) found an inverted U-shaped function: in the case of very high market concentration, the few producers have little need to interlock to set prices.

Moving from a firm perspective to an individual director perspective, Zajac (1988) states that one reason for interlocks is the fact that individuals join boards for financial remuneration, prestige, and contacts that may prove useful in securing subsequent employment opportunities. Furthermore, according to Useem (1984), interlocks are a tool to promote upper-class cohesion, creating a business elite.

Santella et al. (2008) and (2009) examine the interlocking directorships among Italian, French, German, UK and US listed blue chips with reference to end 2007/ beginning 2008. The comparison of the five countries considered shows that Italy, Germany and France (different from the UK and, partially, the US) share a model consisting of a high number of blue chip companies linked to each other through a small number of interlocking directors who serve on several company boards at the same time. In these three countries, the function of board interlocks seems to be to allow the respective blue chips to operate under mutual scrutiny, something that goes beyond the ‘simple collusion’ theory (which refers to companies operating in the same market).

Focusing on Italy, Santella, Drago and Polo (2007) examine board interlocks among all Italian listed companies over the period 1998-2006. They find that collusion established through board interlocks is centred around the Italian blue chips. The authors find that collusion involves a core of financial blue chips and includes a variable number of non-financial ones. AGCM, the Italian Antitrust Authority, finds that Italian listed financial companies are characterised by the phenomenon of interlocking directorates in an ‘extremely pervasive’ way (AGCM, 2009).1

As for the economic function of collusion, while the ‘simple collusion’ theory predicts an increase in the business performance of the companies that establish collusion (Levenstein and Suslow, 2008), empirical studies suggest an ‘enhanced collusion’ theory: Italian interlocking directorates would improve the ability of the controlling shareholders to expropriate the minority shareholders, extracting private benefits from control (Barucci, 2006).2 In other terms, interlocked companies are more likely to act in concert, entailing an advantage for the controlling shareholders,

1 See in particular para. 250: ‘The analysis carried out in the preceding paragraphs has highlighted how the Italian financial system is characterised by phenomena of interlocking directorates in an extremely pervasive way. Listed companies are interested in a particular way by such type of personal ties: nearly 95% of financial companies listed on the Borsa Italiana connected with other listed and non-listed rival companies.’

2 Expropriation of minority shareholders takes place, for instance, when assets are transferred from companies, profits are syphoned off to escape creditors, and troubled firms in a group are propped up using loan guarantees by other listed group members (Johnson et al., 2000).


who appoint the majority of directors (Bertoni and Randone, 2006). Such results seem to be confirmed by Croci and Grassi (2010) who find, with respect to 2008, that network centrality negatively affects firm value, and by Drago et al. (2010) with respect to the 1998-2007 period. According to the literature surveyed by Barker (2010), the Italian corporate governance system is characterised by controlling share-holders’ dominance at the expense of minority shareholders through the recourse to cross-shareholdings or shareholder alliances. Finally, AGCM states that board inter-locks are used by controlling shareholders in groups of listed companies to establish coordination among companies that do not necessarily operate in the same business sector with the purpose of obtaining access to finance beyond their credit merit, thereby reducing value for the credit intermediaries and expropriating the inter-mediary’s minority shareholders (AGCM, 2010).3

The point of the present paper is to focus on the relationship between controlling shareholders (who put in place expropriation) and board interlockers (who establish coordination among company boards) in Italy to verify whether the two correspond. To this end:

- We focus on the 40 Italian blue chips (30 in 1998) which represent about 80% of total market capitalisation in the 1998-2008 period. This allows us to examine the entire network of relevant shareholdings higher than 2% of total voting rights (without introducing any simplifying assumptions)4 which we then compare to the entire network of interlocking directorates among these blue chips;

- For such a small number of companies we make recourse to descriptive statistics to identify the structure and economic function of the network of cross-shareholdings and interlocking directorships with a level of detail and accuracy which would not be allowed in an econometric analysis;

- We find that in 1998 the network of cross-shareholdings allows a few banking shareholders to control a coalition of blue chips, the Mediobanca Galaxy, using the board interlockers as communication channels, while cross-shareholdings and board interlocks play a marginal role for the rest of the blue chips. In 2008, new shareholders appear at the top of the Galaxy and the Galaxy extends its reach outside the cross-shareholding links through board interlockers who now link the Galaxy with the two other groups of blue chips: that of state-controlled companies and that of companies which have no relevant shareholding connection with other blue chips.

3 See in particular p. 132: ‘The Authority has found that links between competitors, both through shareholdings and personal ties, can lead to significant distortions of competition; where they refer to shareholders that are at the same time lenders (as shareholders in different and rival banks) and borrowers, consequences for the stability and reputation of the system can be extremely negative, exposing it to dangerous domino effects.’

4 Bertoni and Randone (2006) only consider shareholdings above 5% of total voting rights or above 10% in case of a common shareholder.


The paper proceeds as follows: section 2 illustrates the methodology and data. Section 3 verifies that the small group of directors who put in place the Italian directorship network belongs in the first place to a handful of shareholder families with ownerships in at least one blue chip. Section 4 verifies that within the Italian blue chips the higher number of interlocking directorates involves those companies belonging to the so-called Mediobanca Galaxy, which are linked to each other through a network of cross-ownership shareholdings; at the top of this network there is a handful of controlling shareholders. Over the period considered, new share-holders take control of the Galaxy, whose reach extends to the other blue chips through interlocking directors only, without the establishment of any relevant cross-ownership link. Section 5 concludes.

2. DATA AND METHODOLOGY

In this paper, we use two different databases. The first one consists of directors sitting on Italian listed company boards in 1998

and 2008. For 2008 we refer to all 289 listed companies and for 1998 to all 239 listed companies.5 The data analysis.6 is made according to the principles of the Exploratory Data Analysis.7 as regards the number of directorships, and those of the Social Network Analysis (SNA)8 as regards the networks’ general structure and their centrality.

The second database consists of all the shareholders in the Italian blue chips in 1998 and 2008 with shareholdings higher than 2%. Since the network of cross-shareholdings is characterised by a high level of complexity in particular for the network of shareholdings in Mediobanca or held by Mediobanca (Mediobanca Galaxy, see Annex I), we simplify its structure to show its underlying framework. The assumptions made are the following:

1. We adopt a definition of control with reference to shareholdings at least equal to 15% of all voting shares;9

5 Source: <http://www.consob.it>. 6 The software used is Borgatti, Everett and Freeman (2002). 7 Exploratory Data Analysis according to the definition given by De Nooy et al. (2005). 8 See Wasserman and Faust (1994) and De Nooy (2005) as regards the SNA methodology with

particular reference to the network structure. 9 Such a threshold takes as a reference the available literature in this respect, namely the 10%

control threshold considered by Laeven and Levine (2008) and the 20% control threshold considered by Faccio and Lang (2002). The definition of ‘control’ used by this literature is a different concept from the ‘decisive influence’ test used by the European Commission under the EC Merger Regulation (Regulation 139/2004), the definition of ‘control’ referred to in the Take-over Bids Directive, Art. 5.3 (Directive 2004/25/EC), and, in general, the various definitions of ‘control’ provided by Italian company law (for which see Cariello, 2007).


2. We consider all relevant shareholdings (higher than 2%) in the same company as part of shareholder coalitions even without a formal shareholder agreement. In our database such cases apply only with reference to the companies belonging to the Mediobanca Galaxy (see also Annex 1) and are based on Bianchi and Bianco (2006). As we will detail in section 4, at the top of the Galaxy we find two financial companies, Mediobanca and Generali and their relevant shareholders;

3. We simplify the network of shareholdings by removing the intermediate rings of the chains with the exception of Mediobanca, Generali, HPI and Compart (so as not to hide their relevance in this analysis as part of the MIB 30/40 Index). All relevant shareholdings are then attributed to the ultimate controlling company (or individual shareholders, physical persons or families);

4. In the cases where Mediobanca and Generali hold shareholdings in the same company, such shareholdings are consolidated within Generali, except when Mediobanca has a much higher shareholding than Generali (HPI, Compart and Pirelli in 1998).

We then proceed to distribute the resulting shareholders among different levels according to the position of their controlling shareholding(s). As a consequence, if two shareholders have relevant shareholdings in the same company, they are positioned at the same level. If one or both relevant shareholders previously mentioned also have a relevant shareholding in a second company, the latter company is positioned at the same level as the first one (for instance, in the case of Banca di Roma, which is placed at the same level as Mediobanca in 1998). The results are used as a basis for the elaboration of Figures 3 and 6.

3. THE ITALIAN DIRECTOR NETWORK

We start our analysis by observing the distribution of the total number of board directors according to the number of directorships they hold in 1998 and 2008 (Table 1). In the period considered, the total number of directors increases by 30.37% (from 1821 to 2374), due to the parallel increase in the number of listed companies (from 239 to 289) in the same period. The average number of directors per company changes from 7.6 to 8.2. In parallel, the number of directors holding more than one board seat increases in absolute terms from 306 to 353 and decreases in terms of incidence from 16.8% to 14.87%. Such reduction takes place in parallel with the growing emphasis in the successive versions of the Italian Corporate Governance Code on the need for directors to make sure that the number of directorships held at the same time in listed companies in Italy or abroad does not conflict with the need to devote the necessary time to their duties (Borsa Italiana, 2006).

Table 2 allows to evaluate the turnover of directors from 1998 to 2008. We observe, in the first place, the exit in 2008 of 75% of the directors with one director-


Table 1: Number of directorships by director 1998-2008: All Italian listed companies

1998 2008

Board directorships Directors % Board

directorships Directors %

1 1515 83.20 1 2021 85.13

2 197 10.82 2 236 9.94

3 65 3.57 3 69 2.91

4 21 1.15 4 34 1.43

5 9 0.49 5 12 0.51

6 7 0.38 6 1 0.04

7 3 0.16 7 1 0.04

8 4 0.22 8 0 0

Total 1821 Total 2374 100.0

Table 2: Director flows by number of directorships in 1998 and 2008 2008

0 1 2 3 4 5 6 7

0 - 1633 161 29 13 3 0 1

1 1137 308 44 17 7 2 0 0 1515

2 106 52 19 15 3 1 1 0 197

3 29 17 10 5 1 3 0 0 65

4 8 8 2 0 2 1 0 0 21

5 0 2 0 2 3 2 0 0 9

6 4 0 0 0 3 0 0 0 7

7 2 1 0 0 0 0 0 0 3

1998

8 1 0 0 1 2 0 0 0 4

2021 236 69 34 12 1 1 Total

The table displays the number of directors present in 1998 (rows) according to the number of their directorships against the same information for 2008 (columns). For instance, of the 1515 directors with one directorship in 1998, 1137 hold no position in 2008, while 308 hold one directorship in 2008.

ship in 1998 (1137 out of 1515); 54% of the directors with two directorships in 1998 (106 out of 197); and 40% of the directors with three or more directorships in 1998


(44 out of 109). Conversely, we observe that 81% of the directors with one directorship in 2008 have no directorships in 1998 (1633 out of 2021), a percentage which falls to 68% for directors with two directorships in 2008 (161 out of 236) and to 39% for directors with three or more directorships in 2008 (46 out of 117).

Summing up the information provided in Table 1 and 2, we observe that the reduction in the incidence of multiple directorships taking place in 2008 compared to 1998 is linked to the higher turnover of directors with one or two directorships and affects, less importantly, the group of directors with three or more directorships. This conclusion confirms the finding in Santella, Drago and Polo (2007) about a higher stability over time of directors holding multiple directorships.

We now move on to focus on directors who hold multiple directorships in 1998 and 2008, that is, on those directors who put in place the Italian network of board interlocks, so as to look for insights about their profile.

Table 3 represents, in the first and second columns, the number of directors who sit on boards cumulatively in 1998 and in 2008, according to the number of directorships held. The third and fourth columns represent the number of the directors with at least one directorship in blue chip companies (MIB 30 in 1998 and MIB 40 in 2008) and their percentage on the total number of directors; the fifth and sixth columns represent the number of the directors with at least one directorship in blue chip companies and with at least one relevant shareholding in one blue chip and their percentage on the total number of directors.

The Table shows an increase in the incidence of directors sitting on the board of at least one Italian blue chip (that is, the MIB 30 Index in 1998 and the MIB 40 Index in 2008), which is more than proportional to the increase in the number of directorships held in any listed company cumulatively in 1998 and 2008. In more detail, while 14% of the directors with not more than one directorship in 1998 or 2008 sit on the board of a blue chip, such percentage increases to 39% for directors who sit on two boards in 1998 (and with not more than one directorship in 2008) or in 2008 (and with not more than one directorship in 1998); and to 55% for those who sit on at least three boards in 1998 or 2008. Of the latter group, 62% of those sitting on six or more boards cumulatively in 1998 and 2008 have at least one directorship in one blue chip company.

From Table 3 we observe the same trend with reference to those directors who are also shareholders of at least one blue chip company: while 0.5% of them have one directorship in 1998 or 2008, such percentage rises to 1.7% in case of two directorships in 1998 or 2008 and to 16% in case of at least 3 directorships in 1998 or 2008. In the latter group, one fifth of the directors sitting on six or more boards cumulatively in 1998 and 2008 are also relevant shareholders (holding more than 2% of total voting shares) in at least one blue chip company.

The Table shows a direct proportionality between the number of directorships held and the number of directors who are at the same time relevant shareholders in at least one blue chip. It is interesting to observe that the percentages of these directors who sit on the board of at least one blue chip and of those who are also relevant


shareholders in at least one blue chip triples when passing the connectivity threshold, that is when they acquire at least two directorships either in 1998 or in 2008 and then are part of the Italian directorship network in one of the two years considered. We interpret such evidence as a sign of the importance for blue chip directors to be part of an information network such as the Italian directorship network.

Our conclusion so far is that a large portion of the Italian network of interlocking directors is made up of directors who have at least one directorship in blue chip companies and who often are also shareholders in those companies. This conclusion is coherent with the findings by Santella, Drago and Polo (2007) synthesised above in section 1.

Table 3: Incidence of directors and directors-shareholders in blue chips according to the total number of directorships in 1998 and in 2008

Directorships Directors

Number Number in M(30/40) comp. % Shareholders

in M(30/40) %

Not more than one director-ship in 1998 or 2008 3078 439 14.26 16 0.52

Two directorships in 1998 or 2008 and max. one directorship

in 2008 or 1998 363 145 39.94 6 1.65

At least three directorships in 1998 or 2008 220 121 55.00 35 15.91

of which at least six or more directorships in 1998 or 2008 45 28 62.22 9 20.00

Tables 4 and 5 provide details on the last row of Table 3 by illustrating the profile of the 45 directors (the names are omitted) who hold at least six board directorships cumulatively in 1998 and 2008. In particular, Table 4 displays those directors who increase their directorships in 2008, while Table 5 displays those who decrease their directorships. This allows us to also identify trends among the leading interlockers.

From both tables, we observe the overwhelming presence of directors with at least one directorship in a blue chip and those with at least one relevant shareholding in a blue chip: 16 out of 22 directors with an increasing number of directorships and 20 out of 23 with a decreasing number of directorships. We also observe the over-whelming presence of directors who are also CEOs and/or Chairpersons. Moreover, the two Tables allow to identify the shareholder families that are central in 1998 and in 2008, with a significant turnover among them (several of those directors-share-holders with a declining number of directorships in 2008 also lose their position on the Blue Chips Index). Our conclusion is that the profile of the main interlockers of the Italian stock market remains stable over time, centred around a group of direc-tors of Italian blue chips who are often also shareholders in the same companies. However, over the period considered, the composition of this group shows discon-


tinuity, with several exits and new entries, mainly among the blue chips’ directors-shareholders. If the structure of the core of the Italian directorship network (at least as far as the number of directorships is concerned) is stable, there has been a signifi-cant turnover in the shareholder families of which this core is made up.

The analysis of the entire network of interlocking directors then focuses on directors and shareholders of blue chips (about 80% of the total capitalisation of the Italian stock market). Our next step is to focus on the profile of the board interlockers of Italian blue chips and on the shareholder links among them.

Table 4: Director flows: directors with a stable or increasing number of directorships

1998 2008 Total Capacity in ‘08 5 5 10 Sh (M40) 2 6 8 Sh (M40) 3 5 8 Sh (M40) 4 4 8 Sh (M40) 2 5 7 Sh (M40) 3 3 6 Sh (M40) 3 5 8 Mgr (M40) 3 5 8 Mgr (M40) 4 4 8 Mgr (M40) 3 4 7 Mgr (M40) 1 5 6 Mgr (M40)* 1 5 6 Mgr (M40) 2 4 6 Mgr (M40)* 2 4 6 Mgr (M40) 3 3 6 Mgr (M40) 3 3 6 Mgr (M40) 3 3 6 Mgr (M40) 5 5 10 Mgr 4 5 9 Mgr 0 7 7 Mgr 2 4 6 Mgr 3 3 6 Mgr

* Shareholders in non-blue chip companies. The table displays the number of directors with at least six directorships in total in 1998 and 2008 and who in 2008 hold more or at least the same number of directorships compared to 1998. In the last column, ‘Mgr’ indicates that in 2008 the director holds at least one directorship as CEO or Chairperson in a listed company; ‘Mgr (M40)’ indicates that in 2008 the director holds at least one directorship as CEO or Chairperson in a listed company belonging to the S&P-MIB 40 Index; ‘Sh’ indicates that in 2008 the director holds at least one directorship as relevant shareholder (>2%) in a listed company; ‘Sh (M40)’ indicates that in 2008 the director holds at least one directorship as relevant shareholder (>2%) in a listed company belonging to the S&P-MIB 40 Index.


Table 5: Director flows: directors with a decreasing number of directorships 1998 2008 Total Capacity in ‘08

8 4 12 Sh (M40) 6 4 10 Sh (M40) 5 3 8 Sh (M40) 8 4 12 Mgr (M40) 8 3 11 Mgr 6 4 10 Mgr (M40) 6 4 10 Mgr (M40) 5 4 9 Mgr (M40) 5 4 9 Mgr (M40) 7 1 8 Mgr (M40) 5 3 8 Mgr (M40) 8 0 8 =* 5 1 6 Mgr (M40)* 7 0 7 =* 7 0 7 =* 6 0 6 = 6 0 6 =* 6 0 6 =* 6 0 6 = 5 1 6 Mgr (M40) 5 4 9 Sh 4 2 6 Mgr 4 2 6 Mgr

* Shareholders in non-blue chip companies. The table displays the number of directors with at least six directorships in total in 1998 and 2008 and who in 2008 have fewer directorships than in 1998. In the last column, ‘Mgr’ indicates that in 2008 the director has at least one directorship as CEO or Chairperson in a listed company; ‘Mgr (M40)’ indicates that in 2008 the director has at least one directorship as CEO or Chairperson in a listed company belonging to the S&P-MIB 40 Index; ‘Sh’ indicates that in 2008 the director has at least one directorship as relevant shareholder (>2%) in a listed company; ‘Sh (M40)’ indicates that in 2008 the director has at least one directorship as relevant shareholder (>2%) in a listed company belonging to the S&P-MIB 40 Index.

4. THE TWO NETWORKS: COMPARING INTERLOCKING DIRECTORATES AND CROSS-OWNERSHIP LINKS

In this section, we explore the network of relevant shareholders to verify whether and to what extent there is a correspondence with the network of interlocking directors.


We use our database on all relevant shareholders in Italian blue chips in 1998 (MIB 30 Index) and 2008 (S&P-MIB 40 Index) with ownerships higher than 2%.

The analysis shows the central role of the companies and their shareholders that make up the so-called Mediobanca Galaxy, that is, the shareholding connections between Mediobanca and Assicurazioni Generali and the blue chips in which Mediobanca and Generali hold shareholdings. The Galaxy is completed by the shareholders of Mediobanca who also hold shareholdings in other blue chips.10 The remaining blue chips may be divided into two groups: companies characterised by a controlling stake of the Italian Treasury and other state-controlled investors (defined here as ‘state-controlled blue chips’); and the remaining companies whose share-holders are not connected through relevant shareholdings, neither with the Medio-banca Galaxy nor with the state-controlled blue chips (defined here as ‘remaining blue chips’).

The three groups have different shareholder structures. As can be seen from Annex 1, the Galaxy is characterised by a network of cross-ownerships involving all the companies that make up the Galaxy, while the state-controlled blue chips mainly share just a common shareholder without any relevant cross-shareholdings, and the remaining blue chips neither share a common shareholder nor have cross-share-holdings.

4.1 The two networks in 1998

We first examine the three groups of companies in 1998. Figure 1 shows that companies making up the Blue Chips Index in 1998 (MIB 30 Index) represent about 80% of the entire capitalisation of the Mercato Telematico Azionario (MTA).11 Within the MIB 30, the three company groups have a different weight: 40% of total market capitalisation made up by the Galaxy, 24% by the remaining blue chips, and a

10 As reported by Barker (2010), the existence of a coalition of blue chips connected through shareholding links around the Mediobanca investment bank is a structural characteristic of Italian post-war capitalism. Since the 1960s, Mediobanca has operated as an independent coordinator and deal-maker for many blockholder interests, particularly the cluster of major industrial firms in northern Italy. This coalition should not be considered as a ‘group’ in the economic and/or legal sense of the term (except for Generali and Alleanza), nor has it ever envisaged to become an actual group: it has always been a mere temporary alliance of otherwise independent organisations, which can be (and have been) replaced across time, with the aim to coordinate financial support from financial members to non-financial members. Concentration processes that took place within the Galaxy across the ten-year period considered (Unicredito and Banca di Roma; San Paolo and Banca Intesa) involved companies which were related neither through cross-shareholdings nor through interlocking directorships in 1998; merging appears to be, within the Galaxy, alternative to and different from cross-shareholding and interlocking.

11 Considering also shareholdings >2% owned by blue chips in listed companies outside the Blue Chips Index and companies outside the blue chips which share at least one relevant share-holder with a blue chip (what we define as the ‘outreach’ of the MIB 30 Index), blue chips amounted, at the time, to 86.5% of total market capitalisation.


lesser role (16%) for the state-controlled blue chips. Share linkages among the three groups are almost non-existent (1% of total market capitalisation), consisting of two shareholdings connecting the Galaxy with the state-controlled group.

After identifying the three groups of Italian blue chips in 1998 on the basis of shareholder linkages, we examine, in Figure 2, how interlocking directorates are distributed within each of the three groups and among the groups. We find that inter-locking directorates can be found primarily within the Mediobanca group (51 out of 73) and only marginally within the state-controlled group and the remaining blue chips. The Mediobanca Galaxy and the remaining blue chips share the second largest number of directorates, while there is just a handful of interlocks within the other two groups and between the Galaxy and the state-controlled group.

The conclusion so far is that the Galaxy, the main group of blue chips in terms of market capitalisation, is also by far the largest group in terms of cross-ownership links and incidence of board interlocks. We then focus on the Mediobanca group to examine its shareholding structure and the distribution of interlocking directorates within it. Figure 3 shows the network of relevant shareholdings within the Galaxy, elaborated according to the methodology illustrated above in section 2.

The network of cross-ownerships shows the centrality of Mediobanca, the mer-chant bank that holds relevant shareholdings in several financial and non-financial blue chips.12 In turn, three shareholders have relevant participations in Mediobanca (all of which financial shareholders: two banks, Unicredito and Comit, and one banking foundation, Ente Cassa di Risparmio di Roma, which also has a relevant shareholding in Banca di Roma).

The conclusion in this respect is that in 1998 the Galaxy is centred around a merchant bank, Mediobanca, which in turn has as relevant shareholders two major Italian banks and a banking foundation which is also a major shareholder of another major bank, Banca di Roma. Among the companies in which Mediobanca participates we find:

- The main Italian insurer, Generali, and its controlled Alleanza (another insurance company) and Intesa, the other major Italian bank at the time;

- Non-financial companies such as Montedison and Edison, through Compart; - Pirelli, in which Mediobanca has relevant shareholdings, directly and through

HPI, together with Marco Tronchetti Provera.

In 1998, the Galaxy is also characterised by two other ‘poles’ represented by the shareholdings held by Giovanni Agnelli (in parallel to the Mediobanca ones, as regards in particular Fiat and HPI), and by San Paolo-Fideuram. HPI and Compart are the ‘meeting points’ of these two poles with Mediobanca: HPI has as relevant

12 For information on the historical role played by Mediobanca on the Italian stock market, see also De Cecco and Ferri (1996).


shareholders Giovanni Agnelli, Pesenti, Mediobanca and Generali, and is also a relevant shareholder of Comit, which, as we have seen, is also one of the three shareholders of Mediobanca; Compart has San Paolo and Mediobanca as relevant shareholders. In addition, Fondazione Cariplo, the second shareholder of Intesa, has a relevant shareholding in San Paolo as well.

If we compare the shareholding structure of the Galaxy with the network of the interlocking directorships within the Galaxy (Figure 4), we observe that the companies connected through interlocking directorates tend to correspond to those connected through shareholding links both ‘upstream’ and ‘downstream’ of a central group composed of Mediobanca, Generali and Comit:

- ‘Upstream’, Mediobanca shares directorships with all the companies of the Unicredito-RAS-Rolo group (upper group);

- ‘Downstream’, the central group is connected with the lower group (Alleanza, HPI and Pirelli), where only 2 of the 9 potential links among these companies are absent (Mediobanca-Alleanza, Generali-HPI), and with the left group, where we observe all 9 possible links.

Sometimes, the directorship links shorten the ownership chain, for instance, directly connecting the upper Unicredito-RAS-Rolo group with HPI, Unicredito-RAS with Pirelli, and Generali with Intesa. In other cases, the directorship links reinforce the shareholding links, as between Mediobanca and FIAT, FIAT and San Paolo, HPI and Pirelli, and Compart and Montedison-Edison; in some cases, they integrate the net-work: Mediobanca with Banca di Roma, Banca di Roma with Pirelli, Edison and Compart (the first ‘meeting point’ described above), HPI (the second ‘meeting point’) with FIAT, Compart, Montedison and Edison, and Alleanza with Intesa and Pirelli.

4.2 The two networks in 2008

If we look at the situation in 2008, we observe (Figure 5) that the Italian blue chips, although in the meantime increased to 40 (S&P-MIB 40 Index), are still divided into the same three company groups. However, we observe the shrinkage of the Galaxy (from 40% to 36% of total market capitalisation) and of the remaining blue chips (from 24% to 12%) to the benefit of the state-controlled group, which more than doubles its contribution to total market capitalisation (from 16% to 33%) thanks in the first place to the floating of new utility companies such as ENI.

As for the changes in the companies belonging to the three groups, we observe the appearance, among the blue chips and the relevant shareholders of Mediobanca, of Pesenti (Italcementi) and Ligresti (Fondiaria) at the top of the Galaxy through their holding companies (Epifarind and Premafin, respectively) and the transfer of several companies (Benetton, Mediaset-Mediolanum, Telecom-TIM) to the Galaxy from the remaining blue chips; on the other hand, we observe the exit of FIAT from


the Galaxy.13 The ownership links among the three groups continue to have a marginal role, with shareholdings equal to just .1% of total market capitalisation.

Looking at the distribution of interlocking directorates among the three groups in 2008 (Figure 6), we observe that the majority of interlocks still concerns the Medio-banca Galaxy (43 out of 84) and that interlocks between the two other groups remain sporadic (only 2).

However, the number of interlocks within the Galaxy decreases from 51 to 43, probably due to the simplification of its shareholder structure (see further in this section). On the other hand, in 2008 we observe a higher interconnection among the three groups, the main factor for the increase with respect to 1998 in the total number of links, going from 73 to 84 thanks to the increase in the number of director interlocks between the Galaxy and the remaining blue chips and between the Galaxy and the state-controlled blue chips. Figure 7 shows that the importance of the director connection between the Galaxy and the state-owned blue chips is to be primarily attributed to links established by ENI and by the energy utility companies in general. As regards the links between the Galaxy and the remaining blue chips, Figure 8 shows that one third of the total number of links involves cooperative banks, whose ownership cap of .5%.14 prevents them from having relevant shareholdings in common with other blue chips and whose control is held by such stakeholders as the company management and/or specific debtors who might at the same time be shareholders within the Galaxy.15 The remaining links among the Galaxy and the remaining blue chips involve primarily Parmalat, Luxottica and FIAT.

Even for 2008, it is thus important to look into the ownership structure of the Galaxy, which remains the first source of director interlocks and which shows a tendency to expand its reach to the two other groups.

From Figure 9, we observe several changes in the ownership structure of the Galaxy. In the first place, we see a simplification in the entire structure, with the first column composed of the relevant shareholders of Mediobanca; Mediobanca is now connected only with Generali, which in turn has now become the holding company for all relevant shareholdings ‘downstream’.

Second, we observe the following changes in the companies and shareholders that make up the Galaxy:

13 The story of the shareholders’ agreements, governing Mediobanca since at least 1994, shows that this change is the result of a gradual evolution. In 1998, Pesenti (Italmobiliare) and Ligresti (SAI) were already relevant shareholders in Mediobanca, but only indirectly through the 2,001% of FinPriv and jointly with other shareholders, like FIAT, Pirelli, Lazard, Generali and Fondiaria; with Berlusconi (Mediolanum), FIAT, Pirelli and Telecom, they were also both non-relevant share-holders and members of the shareholders’ agreement governing Mediobanca. Pesenti became a relevant shareholder of Mediobanca in 1999, Berlusconi in 2000, Ligresti in 2001 and Benetton in 2007 (.just a few months after FIAT had left the shareholders’ agreement), when Berlusconi increased his shareholding (through Fininvest as well).

14 This cap is higher for asset management companies. 15 See Santella (2001), Draghi (2007) and AGCM (2010b), in particular at p. 192.


- The exit of the Agnelli family and its company, FIAT; - The role of Intesa (the result of the merger between Comit and S. Paolo) as

shareholder of Mediobanca has become indirect through Zalesky; only Unicredit (the result of the merger of Unicredito with Banca di Roma) remains of the banking entities, being the only relevant shareholders of Mediobanca in 1998;

- In 2008, there are, besides Unicredit, four new non-financial shareholders of Mediobanca (the Berlusconi, Benetton, Pesenti and Ligresti families), the first two belonging to the remaining blue chips in 1998, the third and the fourth being outside the blue chips. All four also have relevant shareholdings in one or more companies, which are also new entries in the Galaxy; in some cases the family participates in these companies in parallel with the Mediobanca-Generali ownership chain (Telecom, Impregilo, Autogrill, Atlantia), while in other cases the family has the exclusive control of them (Mediolanum, Mediaset, Mondadori, Italcementi, Fondiaria);

- Finally, Pirelli keeps its position ‘downstream’, with a partial change in its relevant shareholders.

Summing up, in 2008 the Galaxy keeps representing a coalition of multiple shareholders holding participations in companies ‘downstream’, but the role of banking shareholders in Mediobanca is more limited while non-financial shareholders have higher stakes. Finally, Generali, an insurance company and not a merchant bank like Mediobanca, changes its role from one of the companies with Mediobanca as shareholder to the holding company, on behalf of Mediobanca, of most participations ‘downstream’.16

In this context, the decrease in the total number of interlocks within the Galaxy seems explained by the simplification of the latter’s structure, while the increase in the number of interlocking directorates between the Galaxy and the remaining blue chips seems to be attributable to several factors: in some cases (FIAT), the ‘memory’ of past structural linkages; in other cases (Luxottica), perhaps an anticipation of structural linkages to come; in other cases, the inclusion among the remaining blue chips of several cooperative banks that cannot, by statute, have relevant shareholdings in common with the Galaxy companies but that might share common business interests with them.

Moving on to examine the director interlocks within the Galaxy (Figure 10), we observe that even in 2008 – and more clearly than in 1998 – the network formed through interlocking directorships follows the one formed through ownership linkages: the upper and lower sides of Figure 10 are largely coincident, respectively, with the left and the right sides of Figure 9. In more detail:

16 In 2008, Mediobanca still has relevant shareholdings in Lottomatica, Telco (holding of Telecom) and Italmobiliare (holding of Italcementi).


1. Some of the Mediobanca shareholders (mainly Unicredit, Italcementi, Medio-lanum, Mediaset and Mondadori) are connected among them and with Generali and Mediobanca;

2. The two latter companies connect the companies ‘upstream’ with those ‘down-stream’ (Pirelli-Alleanza-Intesa-Telecom for Generali, Pirelli-Alleanza-Intesa-Telecom-Autogrill-Atlantia for Mediobanca);

3. Finally, six of the companies located ‘downstream’ share at least one director (forming one single clique).

However, comparing 1998 and 2008, we also find four evolutionary trends:

i. A turnover in the shareholder families within the Galaxy: the exit of the Agnelli family and the entry of the families Benetton, Berlusconi, Ligresti and Pesenti;

ii. The new shareholder families acquire controlling shareholdings in Mediobanca, it being, in 1998, controlled exclusively by a few banks and their controlling foun-dations;

iii. Even though the Galaxy decreases its importance in relative terms as a percentage of total market capitalisation because of the increasing importance of the state-controlled blue chips (though remaining the first group), as far as interlocking directorates are concerned the Galaxy now extends its reach to the state-owned and other blue chips;

iv. In 2008, we observe that the Galaxy includes a large group of public concession-aries (Atlantia, Autogrill, Lottomatica, Mediaset and Telecom) and a public works contractor (Impregilo), and that it establishes director links with the group of state-controlled blue chips. In total, the two groups of companies make up 69% of total market capitalisation (and if we consider their holdings in listed compa-nies outside the blue chips, this amounts to 72% of total market capitalisation). Let us recall that Max Weber used to define as ‘politically oriented’ capitalism a system which is oriented ‘to the profit opportunities in continuous business ac-tivities which arise by virtue … of a position of power guaranteed by the political authority’.17 According to Weber, this form of capitalism is complemented by political groups ‘primarily based on personal loyalty’ towards a ‘personal master’ ruling over ‘comrades’ or ‘subjects’,18 in an economy where ‘the development of markets … is more or less seriously limited by irrational factors’.19

17 Weber (1961), ch. II, § 31, at pp. 164-165. 18 Weber (1961), ch. III, § 6, at p. 221. 19 Weber (1961), ch. III, § 9a, at pp. 233-234.


5. CONCLUSION

Focusing on Italian blue chips (about 80% of total market capitalisation) in 1998-2008, we looked for correspondence between the entire network of relevant shareholdings higher than 2% of total voting rights and the entire network of interlocking directorates among these blue chips. The aim of our exercise was to verify the compatibility of such structural features with the identification of controlling shareholders’ dominance as one of the key features of Italian corporate governance as investigated by the current literature.

We find that in 1998 a network of cross-shareholdings allows a few banking shareholders to control a group of blue chips, the Mediobanca Galaxy, using board interlockers as communication channels, while cross-shareholdings and board interlocks play a marginal role for the rest of the blue chips. In 2008, new shareholders appear at the top of the Galaxy and the Galaxy extends its reach outside the cross-shareholding links through board interlockers who now link the Galaxy with the rest of the blue chips.

We conclude that enhanced collusion undertaken by the Mediobanca Galaxy through interlocking directorates is functional to expropriation by the small group of the Galaxy’s controlling shareholders at the expense of the minority shareholders of the Galaxy and possibly also of the other blue chips with which the Galaxy has established board interlocks in 2008. These links appear to be the sinews of the Italian economy since they also involve, as shareholders, state-owned companies and public concessionaries and seem to embody what Max Weber defined as politically oriented capitalism.


Mediobanca Galaxy

Compart HPIIntesa

Autostrade

Finmeccanica

Italgas

Alitalia INAENI

Remaining blue chips

Benetton

Parmalat

Olivetti

Italian blue chips in 1998 (MIB 30)The three building blocks (shareholdings)

40% of the MTA market



Mediolanum

Mediaset

Telecom TIM

2 shareholdings: San Paolo in INA and Generali in Italgas

Saipem

State-controlled blue chips

AlleanzaGenerali

Mediobanca

Pirelli

Unicredito

MontedisonEdison

Comit S.PaoloFideuramRAS

Rolo BancaFIAT

Banca Roma

State-controlled blue chips

Remaining bluechips

4

Mediobanca Galaxy

51

122

Italian blue chips in 1998 (MIB 30)Interlocking directors within and between building blocks

4

Figure 1

Figure 2


AlleanzaGeneraliMediobanca

Pirelli

Unicredito

Montedison

Edison

Agnelli

Ente CR Roma

Tronchetti

Fondazioni

Fondazioni

Mediobanca Galaxy in 1998 (shareholdings)

Comit

Compart

Comp. S.Paolo S.Paolo Fideuram

Allianz

RAS Rolo Banca

HPI

FIAT

Intesa

Controlling shareholdings

Non-controlling shareholdings >2% Blue chips Non-listed shareholders

Banca Roma

HPI

Edison9

3

Comit

Mediobanca

Compart

Montedison

Pirelli

Intesa

IB S.Paolo

Banca di Roma

RASRolo

Unicredito

Alleanza

Mediobanca Galaxy in 1998 (directors)

Generali

FIAT

3

7*

* 2 missing links of potential 9: Mediobanca-Alleanza and HPI-Generali

3

Figure 3

Figure 4


Intesa-S.Paolo

STM

Saipem

Mediobanca Galaxy

State-controlledblue chips

Finmeccanica

Terna

SNAM

EnelENI


L’espresso

UBI Unipol SEAT

PrysmianParmalat

LuxotticaGeox

FIAT

Fastweb

BuzziBulgari

Tenaris

Banco popolare

BPM

MPS

A2A

2 shareholdings: Generali in L’espresso and Intesa in Parmalat

Italian blue chips in 2008 (FTSE MIB)The three building blocks (shareholdings)

36% of the MTA market*



* Tenaris and STMicroelectronics are listed also outside Italy; therefore their capitalisation is not included in the total figure of Borsa Italiana and in the percentages.

AlleanzaMediasetMondadori

Generali

Mediobanca

Telecom

PirelliImpregilo

Unicredit

Autogrill AtlantiaItalcementi

Lottomatica

La FondiariaMediolanum

State-controlledblue chips


8

Mediobanca Galaxy

43

2110

2

Italian blue chips in 2008 (FTSE MIB)The three building blocks (directors)

0

Figure 5

Figure 6


Mediobanca Galaxy State-controlledCompany Role Role Company

Intesa – SanPaolo MSB D Finmeccanica

Alleanza D D Finmeccanica

Alleanza D D Terna

Pirelli D CH Terna

Atlantia D D ENI

Italcementi D D ENI

Mondadori D CH ENI

Mondadori D D ENI

Mediaset D D ENI

Generali D CEO ENI

Unicredit D CH ENEL

Mediobanca Galaxy and state-controlled blue chips in 2008Directors in common

CH = chairman of board; D = director; MSB = member of the supervisory board

Mediobanca Galaxy and remaining blue chips in 2008Directors in common

MediobancaGalaxy


Alleanza Bulgari

Autogrill Bulgari

Fondiaria Fastweb

Atlantia FIAT

Intesa FIAT

Telecom FIAT

Pirelli Geox

Atlantia Luxottica

Autogrill Luxottica

Generali Luxottica

Telecom Luxottica

Italcementi Parmalat

Mediaset Parmalat

Pirelli Parmalat

Atlantia Prysmian

Atlantia SEAT

MediobancaGalaxy


Italcementi BPM

Fondiaria Banco Popolare

Generali MPS

Alleanza UBI

Generali UBI

Intesa UBI

Italcementi UBI

Figure 7

Figure 8


Alleanza

Mediolanum

Mediaset

Mondadori

GeneraliMediobanca

Intesa-S.Paolo

Telecom

Pirelli

Impregilo

Unicredit

Autogrill

Atlantia

Italcementi

Lottomatica

La Fondiaria

Berlusconi

Pesenti

Ligresti

Benetton

Boroli-Drago

Tronchetti

Zaleski

Fondazioni

Fondazioni

Mediobanca Galaxy in 2008 (shareholdings)

Controlling shareholdings

Non-controlling shareholdings >2% Blue chips Non-listed shareholders

Mediobanca Galaxy in 2008 (directors)

Mediolanum

Mondadori

Alleanza

Intesa-S.PaoloTelecom

Pirelli

Atlantia

Autogrill

Mediaset Italcementi

Unicredit

La Fondiaria

Impregilo

Mediobanca

Lottomatica

6

Generali

4

Figure 9

Figure 10


References

Autorità garante della concorrenza e del mercato (AGCM), Indagine conoscitiva: la corporate governance di banche e compagnie di assicurazioni (2009), available at: <http://www.agcm.it>.

Autorità garante della concorrenza e del mercato (AGCM), Relazione annuale sull’ attività svolta nel 2009 (2010), available at: <http://www.agcm.it>.

Barabasi, A., Linked (Cambridge, MA, Perseus Publishing 2002). Barker, R.M., Corporate Governance, Competition, and Political Parties (Oxford,

Oxford University Press 2010). Barucci, E., Mercato dei capitali e corporate governance in Italia (Carocci editore

2006). Bertoni, F. and P.A. Randone, The Small-World of Italian Finance: Ownership Inter-

connections and Board Interlocks amongst Italian Listed Companies (2006), available at: <http://ssrn.com/abstract=917587>.

Bianchi, M. and M. Bianco, ‘Italian Corporate Governance in the Last 15 Years: From Pyramids to Coalitions?’, ECGI Finance Working Paper No. 144/2006.

Bianchi, M., M. Bianco, S. Giacomelli, A.M. Pacces and S. Trento, Proprietà e controllo delle imprese in Italia (Bologna, Il Mulino 2005).

Borgatti, S.P., ‘Centrality and Network Flow’, 27 Social Networks (2005) pp. 55-71. Borgatti, S.P., M.G. Everett and L.C. Freeman, Ucinet for Windows: Software for

Social Network Analysis (Harvard, MA, Analytic Technologies 2002). Borsa Italiana, Corporate Governance Code (1 March 2006), available at: <http://

www.borsaitaliana.it>. Bunting, D., ‘Corporate Interlocking, Part III – Interlocks and Return on Invest-

ment’, 1 Directors & Boards (1976) pp. 4-11. Burt, R.S., Corporate Profits and Cooptation (New York, Academic Press 1983). Cariello, V., ‘Dal controllo congiunto all’attività congiunta di direzione e coordina-

mento’, 1 Rivista delle società (2007) pp. 1-61. Chabi, S. and J. Maati, ‘Le petit monde du CAC 40’, 153 La Revue du Financier

(2005) pp. 45-62. Cotter, J., A. Shivdasani and M. Zenner, ‘Do Independent Directors Enhance Target

Shareholder Wealth during Tender Offers?’, 43 Journal of Financial Economics (1997) pp. 195-218.

Croci, E. and R. Grassi, ‘The Economic Effect of Interlocking Directorates in Italy: New Evidence Using Centrality Measures’ (2010), available at: <http://papers. ssrn.com/sol3/papers.cfm?abstract_id=1590269>.

Davis, G.F., ‘Agents without Principles? The Spread of the Poison Pill through the Intercorporate Network’, 36 Administrative Science Quarterly (1991) pp. 583-613.

De Cecco, M. and G. Ferri, Le banche d’affari in Italia (Bologna, Il Mulino 1996). De Nooy, W., A. Mrvar and V. Batagelj, Exploratory Social Network Analysis with

Pajek (New York, Cambridge University Press 2005).


Dooley, P.C., ‘The Interlocking Directorate’, 59 American Economic Review (1969) pp. 314-323.

Draghi, M., ‘Politica monetaria e sistema bancario’ (11 July 2007), available at: <http://www.bancaditalia.it/interventi/integov/2007/abi_11_07.pdf>.

Drago, C., F. Millo, R. Ricciuti and P. Santella, ‘Corporate Governance Reforms, Interlocking Directorship Networks and Economic Performance in Italy (1998-2007)’, presented at CESifo-Delphi Conferences on Financial Markets, Corporate Governance and Macroeconomic Outcomes, CESifo Conference Centre, Munich, 4-5 June 2010, available at: <http://www.cesifo-group.de/portal/page/portal/ifo Home/c-event/c2conf/50confforthcoming/_confforthcoming?item_link=del10_ programme.htm>.

Elouaer, S., ‘Boardroom Networks among French Companies: 1996 and 2005’, mimeo (2006).

Faccio, M. and L.H.P. Lang, ‘The Ultimate Ownership of Western European Corpo-rations’, 65 Journal of Financial Economics (2002) pp. 365-95.

Ferris, S.P., M. Jagannathan and A. Pritchard, ‘Too Busy to Mind the Business? Monitoring by Directors with Multiple Board Appointments’, 58 Journal of Finance (2003) pp. 1087-1111.

Fich, E.M.and L.J. White, ‘CEO Compensation and Turnover: The Effects of Mutually Interlocked Boards’, 38 Wake Forest Law Review (2003) pp. 935-959.

Fich, E.M. and L.J. White, ‘Why Do CEOs Reciprocally Sit on Each Other’s Boards?’, 11 Journal of Corporate Finance (2005) pp. 175-195.

Fich, E.M. and A. Shivdasani, ‘Are Busy Boards Effective Monitors?’, 61 Journal of Finance (2006) pp. 689-724.

Fligstein, N. and P. Brantley, ‘Bank Control, Owner Control, or Organizational Dynamics: Who Controls the Large Modern Corporation?’, 98 American Journal of Sociology (1992) pp. 280-307.

Freeman, L.C., ‘Centrality in Networks: I. Conceptual Clarification’, 1 Social Net-works (1979) pp. 215-239.

Hanneman, R.A. and M. Riddle, Introduction to Social Network Methods (Riverside, CA, University of California 2005), available at: <http://faculty.ucr.edu/~hanne man>.

Johnson, S., R. La Porta, F. Lopez-de-Silanes and A. Shleifer, ‘Tunneling’, 90 The American Economic Review (Papers and Proceedings of the One Hundred and Twelfth Annual Meeting of the American Economic Association) (May 2000) pp. 22-27.

Khanna, T. and C. Thomas, ‘Synchronicity and Firm Interlocks in an Emerging Market’, 92 Journal of Financial Economics (2009) pp. 182-204.

Laeven, L. and R. Levine, ‘Bank Governance, Regulation, and Risk Taking’, NBER Working Paper No. W14113 (2008).

Levenstein, M.C. and V.Y. Suslow, ‘Cartels’, in S.N. Durlauf and L.E. Blume, eds., The New Palgrave Dictionary of Economics (Basingstoke, Palgrave Macmillan 2008).


Maati J., ‘Les administrateurs européens du FTSEurofirst 100 constituent-t-ils un petit monde?’, Working Paper (2007).

Mac Canna, L., N. Brennan and E. O’Higgins, ‘National Networks of Corporate Power: An Irish Perspective’, 2 Journal of Management and Governance (1998) pp. 357-379 (23).

Mariolis, P., ‘Interlocking Directorates and Control of Corporations: The Theory of Bank Control’, 56 Social Science Quarterly (1975) pp. 425-39.

Mizruchi, M.S., The Structure of Corporate Political Action (Cambridge, Harvard University Press 1992).

Mizruchi, M.S., ‘What Do Interlocks Do? An Analysis, Critique, and Assessment of Research on Interlocking Directorates’, 22 Annual Review of Sociology (1996) pp. 271-298.

Mizruchi M.S. and L.B. Stearns, ‘A Longitudinal Study of the Formation of Inter-locking Directorates’, 33 Administrative Science Quarterly (1988) pp. 194-210.

Mizruchi, M.S. and L.B. Stearns, ‘A Longitudinal Study of Borrowing by Large American Corporations’, 39 Administrative Science Quarterly (1994) pp. 118-140.

Palmer, D.A., P.D. Jennings and X. Zhou, ‘Late Adoption of the Multidivisional Form by Large US Corporations: Institutional, Political and Economic Accounts’, 38 Administrative Science Quarterly (1993) pp. 100-131.

Pennings, J.M., Interlocking Directorates (San Francisco, Jossey-Bass 1980). Pfeffer, J., ‘Size and Composition of Corporate Boards of Directors: The Organiza-

tion and Its Environment’, 17 Administrative Science Quarterly (1972) pp. 218-28. Pfeffer, J. and G.R. Salancik, The External Control of Organizations: A Resource

Dependence Perspective (New York, NY, Harper and Row 1978). Phan, P.H., S.H. Lee and S.C. Lau, ‘The Performance Impact of Interlocking Direc-

torates: The Case of Singapore’, 15 Journal of Managerial Issues (2003) pp. 338-352.

Rinaldi, A., ‘Business Elites in Italy: 1913-1972’, paper prepared for ‘Business and Society’, the 2004 Conference of the Association of Business Historians, Notting-ham, 25-26 June 2004.

Rinaldi, A. and M. Vasta, ‘The Structure of Italian Capitalism, 1952-1972: New Evidence Using the Interlocking Directorates Technique’, 12 Financial History Review (2005) pp. 173-198.

Santella, P., ‘Banche cooperative o fondazioni bancarie? Un’analisi di corporate governance delle banche di credito cooperativo’ [A corporate governance analysis of Italian credit unions], Bancaria, November 2001, also available at: <http://www. ssrn.com>.

Santella, P., C. Drago and A. Polo, ‘The Italian Chamber of Lords Sits on Listed Company Boards: An Empirical Analysis of Italian Listed Company Boards from 1998 to 2006’ (2007), available at: <http://papers.ssrn.com/sol3/papers.cfm? abstract_id=1027947>.


Santella, P., C. Drago, E. Gagliardi and A. Polo, ‘Una comparazione tra le reti di amministratori nelle principali società quotate in Italia, Francia e Gran Bretagna’, 2 L’Industria (2008) pp. 271-288.

Santella, P., C. Drago, E. Gagliardi and A. Polo, ‘A Comparison of the Director Networks of the Main Listed Companies in France, Germany, Italy, the United Kingdom, and the United States’, presented at the EMLE Workshop, Hamburg, 13 February 2009 (<http://www.emle.org/Subpages_rubric/index.php?rubric= Midtermmeeting>), available at: <http://papers.ssrn.com/sol3/papers.cfm?abstract _id=1437087>.

Selznick, P., TVA and the Grass Roots (New York, Harper & Row 1949). Stokman, F.N. and F.W. Wasseur, ‘National Networks in 1976: A Structural Com-

parison’, in F.N. Stokman, R. Ziegler and J. Scott, eds., Networks of Corporate Power: A Comparative Analysis of Ten Countries (Cambridge, UK, Polity Press 1986) pp. 20-44.

Useem, M., The Inner Circle (New York, Oxford University Press 1984). Wasserman, S. and K. Faust, Social Network Analysis (Cambridge, Cambridge Uni-

versity Press 1994). Weber, M., Economia e società (Edizioni di Comunità, Milano 1961). Whish, R., Competition Law, 6th edn. (Oxford University Press 2009). Yeo, H.-J., C. Pochet and A. Alcouffe, ‘CEO Reciprocal Interlocks in French Corpo-

rations’, 7 Journal of Management and Governance (2003) pp. 87-108. Zajac, E.J., ‘Interlocking Directorates as an Interorganizational Strategy’, 31 Academy

of Management Journal (1988) pp. 428-38.

Annex 1 Total relevant shareholders in 1998 (MIB 30 companies) IRI 53.027% Alitalia Comp. San Paolo 3.000% INA

Ist. Banc. San Paolo 3.938%Generali 56.171% Alleanza Min. Tesoro 13.380%Banca d'Italia 2.020% Fond. Cariplo 2.500%

Banca d'Italia 2.540%IRI 86.577% Autostrade

Schroeder Inv. Man. 2.054% ItalgasIst. Banc. San Paolo 74.347% Banca Fideuram Generali 3.168%

Min. Tesoro 41.937%IRI 5.389% Banca di Roma Banca d'Italia 6.220%Libyan Bank 5.000%Schroeder Inv. Man. 3.194% MS Dean Witter Inv. Man. 2.891% MediasetAgnelli SAPA 4.049% Cap. & Res. Man. 2.775%Ente CR Roma 27.059% Canal Plus 6.450%

S. Berlusconi 49.434%Banca Lombarda 3.720% Banca Intesa Kirch 5.560%Fond. Cariplo 22.643% Kingdom 5-KR-16 2.340%Mittel 2.627% British Telecom. 2.150%Generali 8.199%Credit Agricole 26.475% La France P&G 2.001% Mediobanca

Allianz 2.003%Ragione 70.182% Benetton Fin Priv 2.001%

Comit 9.400%Tiger Man. 3.031% Comit Unicredito 9.220%Deutsche Bank 4.457% Ente CR Roma 7.570%Commerz Bank 4.330%HPI 2.074% L. Tombolato 5.467% MediolanumParibas 4.042% E. Doris 31.338%Sanford-Bernstein 3.479% S. Berlusconi 37.820%Generali 4.954%Burgo 2.030% Compart 32.942% Montedison

Merryl Linch AM 2.308%Unicredito 6.950% Compart Mediobanca 3.770%Spafid 4.349%Generali 2.039% Bell 10.229% OlivettiComp. San Paolo 8.253% Schroeder Inv. Man. 4.928%Ente CR Roma 10.140% Deutsche Borse Clear. 3.716%Mediobanca 15.260% Mannesmann 2.338%Comit 3.260%

C. Tanzi 51.580% ParmalatCompart 61.430% Edison

Pirelli SAPA 46.019% PirelliMin. Tesoro 36.947% ENI Generali 2.229%

Generali 2.877% FIAT Allianz 51.442% RASAgnelli SAPA 23.936%Mediobanca 2.230% Unicredito 65.094% Rolo Banca

Fond. CR Modena 3.960%Fidelity Inv. 3.660% Finmeccanica Allianz 4.160%IRI 61.563%

General Electric 2.072% SaipemMediobanca 11.739% Generali Min. Tesoro 43.224%Spafid 6.397%Euralux 4.780% Telecom 60.312% TIMBanca d'Italia 4.740%

Min. Tesoro 3.950% TelecomGemina 3.021% HPI Banca d'Italia 2.290%Agnelli SAPA 13.259%Pesenti 4.749% Spafid 2.471% UnicreditoSpafid 2.129% Fond. Cassamarca 3.806%Mediobanca 13.096% Fond CR Verona et al. 19.257%Generali 3.082% Allianz 3.067%

Fond. CR Torino 15.130%Comp. San Paolo 16.155% Ist. Banc. San Paolo Fidelity Inv. 2.466%Banco Santander 5.012% Amvescap 2.060%Fond. Cariplo 2.773% IDS International 2.237%Agnelli SAPA 3.961% Commercial Union 2.215%MPS 6.176%Reale Mutua Ass. 3.000%

Shar

ehol

ders

in th

e M

edio

banc

a gr

oup

in 1

998

(MIB

30

com

pani

es)

Shareholders in the state-controlled group in 1998 (MIB 30 companies) Shareholders in the ‘remaining blue chips’ group in 1998 (MIB 30 companies)

5.389% Banca di Roma

IRI 53.027% Alitalia

86.577% Autostrade

61.563% Finmeccanica 3.660% Fidelity Inv.

3.000% Comp. San Paolo

3.938% IB San Paolo

36.947% ENI 2.500% Fond. Cariplo

13.380% INA 2.540% Banca d'Italia

43.224% Saipem 2.072% General Electric

Min. Tesoro 41.937% Italgas 2.054% Schroeder Inv. Man.

3.950% Telecom 3.168% Generali

6.220% Banca d'Italia

Mediobanca GalaxyRemaining blue chips

Ragione 70.182% Benetton

4.000% Pirelli SAPA

Min. Tesoro 3.950% Telecom 60.312% TIM

Banca d'Italia 2.290%

C. Tanzi 51.580% Parmalat

Bell 10.229% Olivetti

Schroeder Inv. Man. 4.928%

Deutsche Borse Clear. 3.716%

Mannesmann 2.338%

MS Dean Witter Inv. Man. 2.891%

Cap. & Res. Man. 2.775%

Canal Plus 6.450%

Kirch 5.560%

Kingdom 5-KR-16 2.340%

British Telecom. 2.150%

S. Berlusconi 49.434% Mediaset

37.820% Mediolanum

L. Tombolato 5.467%

E. Doris 31.338% Mediobanca Galaxy

Tota

l rel

evan

t sha

reho

lder

s in

2008

(MIB

40

com

pani

es)

Shar

ehol

ders

in th

e M

edio

banc

a gr

oup

in 2

008

(MIB

40

com

pani

es)

Shar

ehol

ders

in th

e st

ate-

cont

rolle

d gr

oup

in 2

008

(MIB

40

com

pani

es)

Shareholders in the ‘remaining blue chips’ group in 2008 (MIB 40 companies) Barclays GI 2.018% Banco Popolare Caltagirone 3.923% MPSFIL 2.028% JP Morgan 4.655%Stichting PF 2.002% Fondazione MPS 55.489%

Axa 2.052%Harris Associates 5.005% Bulgari Unicoop Firenze 2.427%Oppenheimer Funds 2.103%P. Bulgari 23.786% Goldman Sachs AM 7.565% ParmalatN. Bulgari 23.796% Mackenzie Cundill 2.013%F. Trapani 4.453% Intesa-S.Paolo 2.013%

JP Morgan 2.043% BPM HSBC Bank 2.451% PrysmanCredit Suisse 3.412% JP Morgan 2.052%Barclays GI 2.011% Credit Suisse 2.466%Caisse Federal 2.008% FMR 4.786%

Goldman Sachs Group 31.777%Barclays 3.304% Buzzi Sull Yoon Suk 9.900%JP Morgan 2.068%Fimedi 55.386% CVC Silver Nominee 14.748% SEATArtio 2.195% Alfieri ass 2.950%

CIE Manag. 19.173%C. Caracciolo 10.671% Espresso Cart Lux 8.670%C. De Benedetti 53.948% Tarc Lux 4.604%G.M. Crespi 2.359%Generali 2.647% Fam. Rocca 60.400% TenarisFond. CR Trieste 2.001%

Tassara 2.282% UBISwisscom 82.082% Fastweb Fond. CR Cuneo 2.254%

Fond. B. Monte Lomb. 2.278%Cap. Res. & Manag. 5.183% FIATFam. Agnelli 30.419% Holmo 31.404% UnipolFMR 2.185% P&V Assurances 2.558%

Cap. Res. & Manag. 5.108% GeoxM. Polegato 70.989%

Harris Ass. 2.039% LuxotticaL. Del Vecchio 68.520%Deutsche B. Trust Comp. 9.641%G. Armani 4.955% Mediobanca Galaxy

interlocking directorships and cross-shareholdings among italian blue chips

Documents