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- Start date
- Duration
- Format
- Language
- 11 Sept 2024
- 6 days
- Class
- English
Identifying growth opportunities and drive innovation with a strategic agenda, understanding key external trends and effectively merging financial and market perspectives.
The ownership structure and governance model of companies impact their economic performance, according to conventional wisdom. But in the past, attempts to explore this conviction analytically have been hindered by the complex factors at play and the limited access to data. Today, the Business Monitor of the Corporate Governance Lab at SDA Bocconi School of Management is working to produce an analysis of governance from multiple perspectives, capturing its impact by looking at its myriad facets. The aim is to provide insights to entrepreneurs, board members, consultants, and more generally, anyone who may find themselves facing governance issues in real-life scenarios.
Thanks to technological developments, much of the information that companies are required to report, for example to the Chamber of Commerce, is now digitalized. Another useful tool is an algorithm that automates some of the research and codifies a series of variables, aggregating and adapting data from different sources. Leveraging these advances, researchers at the Monitor began building a database in 2018 that included information, not on a sample of big businesses, but the entire population of medium and large-sized companies (i.e. with €100 million plus in turnover).
The data, which has been continuously updated from the start, relate to information on the ownership structure (encompassing the entire universe of companies above a certain size under the control of a family, coalition, financial partner, or the State), the composition of the board of directors, economic performance, foreign investments, acquisitions and orientation toward innovation (measured by the number of patents filed).
For specific layers of analysis (such as the expertise of board members), in addition to updates, supplementary data collection and processing was done (based on thousands of LinkedIn profiles, for example).
Since 2018, the database has gradually expanded to count all unlisted companies with turnover in excess of €10 million euro, a total of 40,000 enterprises. And what’s more important, as this project involves continual monitoring, the Lab can run time series analysis, tracking changes in ownership and governance, and evaluating the impacts of these changes on business strategy and performance in subsequent years.
For the 2024 edition of the Monitor, on one hand, the field was limited to companies owned by individuals with a minimum of €20 million in turnover; on the other, the timeline was extended to track changes that took place from 2014 on. This means that more than 14,000 companies are being mapped, and for 2,592 of these, additional analysis is being run to evaluate the effects of the ongoing dynamics in the ownership structure.
Specifically, data from 2014 to 2022 show that in companies whose ownership concentration increased, turnover was 13% higher compared to businesses in which the opposite occurred. What’s more, this figure is 19% higher compared to companies that kept the same ownership structure throughout the time period in question.
The Lab has also developed a Corporate Governance Index that measures good governance in companies by looking at five questions: Is there a Board of Directors (BoD)? Is there an individual leader? Is the BoD open to outsiders? Is there a separation of the roles of President and CEO? How diverse is the BoD in terms of members’ gender, age, and where they come from?
The 2023 Monitor demonstrated that the quality of governance which big companies put into practice in their value chain drives the economic performance for all the companies in that ecosystem. What’s more, the 2024 Monitor finds that good governance amplifies the positive impacts of both ownership concentration and fragmentation.
Another research topic revisited by the Monitor in 2024 is gender diversity and the role of women, corroborating the fact that they face a difficult path to get to the top. When ownership is opened up, often there are some women among the new board members; but when a sole owner sits at the helm, this person is almost never a woman.
The Monitor’s database paves the way for exploring several new directions in future research. Here are just a few: