The Control of the Corporate Governance Codes by the Italian Board of Statutory Auditors

This chapter aims to expand the CGC literature by discussing the nature and effectiveness of theItalian CGC auditing performed by the BoSA. To this aim, we examine the empirical question of thesubstantiality of BoSA’ governance auditing by examining BoSA’ reports. In fact, although analyzing actualcompliance with CGCs is very difficult to achieve, as this means analyzing the firm’s actual behaviour,some relevant information could be gained by investigating audit reports on CGCs. Thus, whilstprevious research has examined mainly the disclosure of compliance-related information by management(often disclosing only formal compliance), this study examines the disclosure of compliance byan internal control board. As a second step of the analysis, we investigate the association between somecharacteristics of the BoSA and BoSA disclosures related to the control of the CGC. More specifically,we examine the association between the composition and the degree of activity of the BoSA, in termsof the time it spends in its institutional duties and the disclosure of a set of nine different controls onCGC included in an index of substantial governance auditing.