Comply or Explain: Investor Protection Through the Italian Corporate Governance Code

Nearly 86% of listed Italian companies now claim to be in formal compliance with the provisions of the Italian Corporate Governance Code, which, like many codes in EU countries, give companies the option to either comply or explain their decision not to do so. But in the wake of the recent financial crisis, the effectiveness of such self‐regulatory corporate governance codes has been subjected to increasing skepticism. In particular, critics wonder whether such governance codes actually encourage the adoption of best practices and promote better governance. This article presents a governance indicator (CoRe) devised by the authors that attempts to assess the actual, or effective, levels of compliance with the Italian Corporate Governance Code in terms of listed companies' procedures for dealing with related party transactions (RPTs). The authors report that the companies' level of effective compliance with regard to RPTs is considerably lower than their publicly reported levels of formal compliance. The authors also report that higher levels of effective compliance tend to be found in companies where (1) minority shareholders have appointed one or more directors; (2) independent directors serve on important committees; and (3) there are significant holdings by institutional investors—particularly foreign investors—who participate in general shareholder meetings.     

DIVORCE AND THE OPTION VALUE OF MARITAL SEARCH

This work tests whether the introduction of divorce law changes the timing of marital search. Rational agents should adjust to the divorce risk by increasing the average search spell, whereas option value theory stresses the role of irreversible investments: in this case, the new exit option should result in shorter spells. Using a dynamic model of marital search, a new data set of retrospective individual Italian data, and two robust statistical specifications, we find strong evidence that the legal innovation actually lowered the age at marriage, thereby worsening the level of marital matching, and possibly reinforcing self‐fulfilling prophecies of divorce.     

Accounting and governance in the final years of the Papal States: Dual roles in the papacy of Pius IX (1846–1870)

The Papal States represent a unique and long period in Italian government and in the government of the Roman Catholic Church prior to Italy's unification in 1870. The 25-year period prior to unification was a particularly tumultuous period when the Papal States struggled for survival, faced military and popular challenges and became increasingly indebted. Accounting could become an important tool to assist decision-making and enhance the Papal States' sustainability, as shown by the governance reforms promulgated by Pope Pius IX in this period. Nevertheless, accountants chose what to make visible and emphasised secular, rather than the sacred aspects of the Papal States. Despite reforms, there was a disconnection between the leaders and the accountants. This research therefore examines the role of accounting in such an institution, and extends the concept of a sacred-secular divide to a state government beset by resource constraints and challenged to fulfil its spiritual aims.     

Correlation dynamics in European equity markets

We examine correlation dynamics using daily data from 1993 to 2002 on the five largest Euro-zone stock market indices. We also study, for comparison, the correlations of a sample of individual stocks. We employ both unconditional and conditional estimation methodologies, including estimation of the conditional correlations using the symmetric and asymmetric DCC-MVGARCH model, extended with the inclusion of a deterministic time trend. We confirm the presence of a structural break in market index correlations reported by previous researchers and, using an innovative likelihood-based search, we find that the it occurred at the beginning the process of monetary integration in the Euro-zone. We find mixed evidence of asymmetric correlation reactions to news of the type modelled by conventional asymmetric DCC-MVGARCH specifications.     

Have European Stocks become More Volatile? An Empirical Investigation of Idiosyncratic and Market Risk in the Euro Area

We examine the dynamics of idiosyncratic risk, market risk and return correlations in European equity markets using weekly observations from 3515 stocks listed in the 12 euro area stock markets over the period 1974–2004. Similarly to Campbell et al. (2001) , we find a rise in idiosyncratic volatility, implying that it now takes more stocks to diversify away idiosyncratic risk. Contrary to the US, however, market risk is trended upwards in Europe and correlations are not trended downwards. Both the volatility and correlation measures are pro‐cyclical, and they rise during times of low market returns. Market and average idiosyncratic volatility jointly predict market wide returns, and the latter impact upon both market and idiosyncratic volatility. This has asset pricing and risk management implications.     

Reviews

ECONOMIC RESTRUCTURING AND LOCAL RESPONSE.

Stohr, W. (ed) 1990: Global Challenge and Local Response. London: Mansell, £45.00.

Trade Union Advisory Committee - Organisation for Economic Cooperation and Development, 1989: Problems and Opportunities of Restructuring Industrial Regions. Paris: OECD, no price stated.

TRADES UNIONS IN THE

1990S. Philpott, J. 1990: Trade Unions and the Economy: Into the 1990s-Papers and Proceedings of a seminar. Employment Institute, £4.50 paper.

EUROPEAN MONETARY UNION.

Davies, G., Currie, D., MacKinnon, N. and Brunskill, I. 1990: European Monetary Union - The Issues. London: Institute for Public Policy Research, Economic Study No 4, £10.00.

Campaign for Work, 1990: Should Britain Join the Exchange Rate Mechanism of the European Monetary System? London, £3.00.     

Tourism and transformation: negotiating metaphors,experiencing change

The article introduces this special issue on tourism and transformation. After offering a brief review of the place and significance of ‘transformation’ in social sciences studies of tourism – from ‘impact studies’ to ethnographies of tourists and, more recently, ‘tourist media studies’ – we propose to take one step further and focus our attention on the performativity and reflexivity of ‘transformation’. Our main argument is that much may be gained analytically by considering how notions and experiences of transformation are addressed, negotiated and purposefully deployed in tourism contexts. We conclude with an outline of each of the contributions to this special issue, stressing that the collection re-opens the issue of transformation in tourism and provides new insights into how experiences-turned-metaphors and metaphors-turned-experiences influence both the travel experience and the development of theory.