Moral Governance: Politicians, Ownership, and Control

Abstract

We investigate upon the influences exerted by politicians on the Board and on ownership structure, as an application of political power to corporations. We characterize moral governance as the joint result of these efforts on managerial turnover and ownership turnover. We comment upon two Italian clinical cases of private, listed firms in which politicians enter the scene when a major event occurs (i.e., re-organization, merger, and acquisition activity). Our model could serve as a guideline and checklist for insiders to interact with politicians. We suggest this could be of interest in countries where there is a common level ground – such as in Europe – but with different cultures on the role of the politician in the business environment. It could be an instrument to detect political intervention in the economy to be also used for cross-country comparisons of business environment and for assessing transparency of companies in developed and developing countries. Recents events from the financial crisis in 2008 have increased the urge to investigate these themes.