The Determinants of Regulatory Compliance: An Analysis of Insider Trading Disclosures in Italy

Emanuele Bajo, Marco Bigelli, David Hillier, Barbara Petracci

Journal of Business Ethics · 2009 · Volume 90 · Issue 3

Abstract

This paper investigates the determinants of regulatory compliance in corporate organizations. Exploiting a unique enforcement and reporting framework for insider trading in Italy, we present three main findings. First, board governance, such as chief executive–chairman duality and the proportion of non-executive directors, does not increase the propensity of firms to comply with regulation. Second, family firms and firms with a high degree of separation of ownership from control are most likely to comply with regulation. Third, corporate ethos is more important in predicting regulatory compliance than explicit corporate governance structures.

Keywords

regulatory compliance, corporate governance, insider trading, regulation, Italy, family firms

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