The impact of governance on business performance

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: 

• Generational change in a broad sense. In more than one company out of four in Italy, the leader is currently over 70.  This would suggest delving into the conditions that would favor a handover in ownership and leadership.  
• Circumstances that cause or could help prevent conflict between partners in unlisted firms.  

• The use of holdings and sub-holdings in Groups and how they shape strategic decisions and financial results.