The Italian model of corporate governance is characterised by a high degree of ownership concentration, both for unlisted and listed companies. In the absence of an institutional framework facilitating more dispersed ownership, as in the Anglo-Saxon countries, or mechanisms for financial supervision, as in some Continental European countries, a limited degree of separation between ownership and control is achieved mainly by using pyramidal groups. We analyse some of the effects of this organisational mode on firms' financial structure and efficiency. We report results on the effects of the limited protection of minority shareholders on the extent to which companies in pyramidal groups succeed in raising external finance and investigate how internal capital markets work in pyramidal groups. We also present some results on the relationship between firms' performance and governance structures. (C) 1999 Published by Elsevier Science B.V. All rights reserved.
