Analysis of some causal effects of corporate governance issues on firm performance in Italian SMEs

Several empirical studies on large public companies seem to have revealed a positive relationship between corporate governance issues and a firm’s performance. The size and composition of the BoD, the number of board meetings held in a year, the CEO duality, the compensation of board members, conflict of interest disclosure, etc. tend to have a positive relationship with the financial performance of such big companies. If we consider smaller companies, such as SMEs, the relationship between corporate governance issues and firm performance is less evident, due to an obvious lack of specific studies in the literature and increasing difficulties to prove that relationship. In this explorative study, focused on Italian SMEs, we analysed relationship between CG matters and financial performance, also in relation to family or non-family ownership and control. Using a questionnaire addressed to the SMEs operating in construction, grocery and distribution and manufacturing macro-sectors in the Italian Veneto region, certain specific variables related to good corporate governance were monitored. Separately, data regarding the financial performance of those companies, in terms of ROA, ROI and ROS indexes, were collected. A few relationships between those variables and the financial performance were identified, but the data set should be improved and refined for a more thorough analysis and a stronger validity of results. JEL: G30 – G34 – K22