Eppure, non si muove: Legal change, institutional stability and Italian corporate governance

Abstract

Prevailing theories in political economy hold that a coalition or political party, acting through parliament, can break down institutions of stable shareholding. In spite of extremely favourable conditions in the late 1990s – the election and durable rule of a leftist government supported by a transparency coalition, a bureaucratic elite that favoured institutional change, and substantial state shareholdings which the government could privatise in pursuit of its objectives – these reforms failed to affect the concentration of shareholdings among the largest private companies in Italy. This disjuncture between legal change and actual practice in Italian corporate governance suggests that current theories of institutional change in corporate governance systems are incomplete. The focus of inquiry needs to turn to the political resources of those who support the existing system: managers and large shareholders.