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Dissenting Directors, by ECGI

November 13, 2016 Leave a comment

In october 2016 Piergaetano Marchetti, Gianfranco Siciliano both from Bocconi University, and Marco Ventoruzzo from Bocconi University, Pennsylvania State University and ECGI, published an article (1) where they tried to provide some empirical evidence about the role of a director that either votes against a resolution of the board or resigns. They use data from the Italian market regarding both independent and non-independent directors.

According to the authors, the Italian legal framework is very appropriate for the survey for several reasons:

  • List voting favors diverse boards, thus higher levels of debate within the boardroom; list voting allows minorities to nominate directors on their own;
  • As the case of controlling shareholders is common, the number of dissenting directors should be scant;
  • Information is otherwise abundant.

 

In Italy there are three types of directors, executives, non-executives and independents. Even if directors are elected by minorities, they all owe fiduciary duties to the corporations and all shareholders. Dissenting (not resigning) may reduce legal liabilities for the director, with several formal requirements, (the minutes should record the dissent and so on).

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The authors try to obtain answers to certain questions: Read more…