by Carlo Bellavite Pellegrini, Laura Pellegrini, Emiliano Sironi
The possibility to choose between two alternative corporate governance systems (i. e. one-tier
and two-tier board) was introduced in Italy by the Corporate Law Reform at the beginning of 2004. This reform, which provides for the adoption of a one- or a two-tier board for both listed and unlisted joint stock companies, has modified the traditional Italian corporate governance system based on a board of directors and an external audit committee, although the percentage of firms adopting the alternative systems is still low. This survey implements probit regressions in order to identify the determinants of the adoption of alternative corporate governance systems. Results provide evidence that corporations with better performances in terms of sales, such as corporations that are subject to control and coordination prefer to maintain a traditional system. Conversely, firms with ownership in the hands of a high proportion of individual shareholders prefer a one-tier model.
Key words: Corporate governance, One tier and two tier board, Joint stock companies.
JEL Classification: G34, K22, M42.
by Carlo Beretta
Making use of and following substantive rationality is a costly and not always feasible option.
In games, this option generates two levels of reasoning. The player has to decide how to play the overt game, but this requires him to decide how to play an underlying game in which the alternatives are to follow either substantive rationality or a different rule, here that of reasonableness, in playing the overt game. A strategy is reasonable if coupled with its best response it results in the player that adopts it achieving the highest payoff among those dominating the Nash equilibria of the overt game. The underlying game can have more than one equilibrium. Substantive rationality in the underlying game can justify behaviour which is at odds with substantively rational behaviour in the overt game. The case of the centipede is used as an example.
Key words: Common knowledge, Rationality, Backward induction, Reasonableness, Incomplete
information, Centipede game.
JEL Classification: C72.
by Gianluca Femminis, Gianmaria Martini
We develop a dynamic duopoly, in which firms have to take into account a technological externality, which reduces their innovation costs over time, and an inter-firm spillover, which lowers only the second comer’s R&D costs. This spillover exerts its effect after a disclosure lag. We identify three possible equilibria, which are classified according to the timing of R&D investments, as early, intermediate, and late. The intermediate equilibrium is subgame perfect for a wide parameter range. When the size of the innovation is large, it implies under-investment. Hence, even in the presence of a moderate degree of inter-firm spillover, the competitive equilibrium calls for public policies aimed at increasing the research activity. Focusing on minor innovations – the case in which according to earlier literature the market outcome implies sub-optimal investment levels – our results imply that policies aimed at stimulating R&D have to be less sizeable than suggested before.
Key words: R&D, Knowledge spillover, Dynamic oligopoly.
JEL Classification: L13, L41, O33.
by C. Mussida
This paper applies duration and competing risk models to individual-level data on unemployment spells from the 1993-2003 labour force surveys in Italy. We aim to assess whether labour market intervention and regulations introduced in the nineties acted in the expected direction, that is reducing the incidence of long-term unemployment. The determinants – individual and structural – of both unemployment duration and its main exits (employment and inactivity) are also discussed. At least as far as our analysis goes, we find evidence of strong negative duration dependence. This leads to increased unemployment persistence and to an enhanced incidence of long-term unemployment. The legislation of the nineties, therefore, did not contribute to decline in the bulk of long-term unemployment. Key words: Unemployment duration, Competing risks. JEL Classification: C24, C41, J64.
by L. Maugeri