Governance responsibility in Italy to monitor corporate performance

Author:

Giovando Guido1ORCID

Affiliation:

1. University of Turin

Abstract

The annual financial statement is the document that provides a “snapshot” of the effects of the management operations that have taken place during the fiscal year. The analysis derived from it is a tool that, over the years, is increasingly asserting its importance as a means of communicating, not only with internal shareholders but also with external stakeholders, who need to know the company’s dynamics, its key points, and future effects. In this panorama, corporate governance is playing an increasingly fundamental role, which, through the instruments of control, exercises an important activity to protect not only the shareholders but also all the stakeholders. In Italy, the new corporate discipline is constantly addressing more responsibility to governance by giving them the task of monitoring and bringing out states of corporate crisis promptly. In order for these obligations to be put in place, the Code of Corporate Crisis and Insolvency was introduced, which provides a reporting system. Therefore, the corporate supervisory bodies and the auditor must proceed with the 5 alerts, i.e., verify that the ratios applied to the financial statement analysis do not exceed the thresholds provided as it would imply the presence of imbalances of an asset and financial nature. The proper and functional application of this alert procedure is only possible if governance equips the company with all the appropriate organizational and control arrangements to detect the necessary data in a timely manner in order to be able to analyze them and then take the appropriate corrective actions. In this study, we have analyzed a sample of companies to verify whether the indexes proposed by the National Council of Chartered Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili, CNDCEC) can provide real help in managing a company’s state of insolvency and are not merely theoretical management of the situation.

Publisher

Virtus Interpress

Subject

General Business, Management and Accounting

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