CORPORATE GOVERNANCE AND INTERNAL CONTROL DEFICIENCIES IN FINANCIAL INSTITUTIONS: DIRECT CAUSES OF SANCTIONS BY THE SUPERVISORY AUTHORITY

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Abstract

The present study represents an original and empirical investigation on the topic of prudential vigilance and financial sanctions inflicted to financial intermediaries by the Bank of Italy during the period between 2013-2016. This paper seeks to analyse the trend of sanctions during the period between 2013 and 2016 and if sanctions in 2016 were influenced by the dimension of the financial institution, corporate governance and financial reporting items of the previous year (2015). Consequently the study was divided into two parts: in the former a unique dataset was accumulated and considers all the documents and related information on the financial penalties inflicted by Banca d’Italia in the period between 2013 and 2016. For the second part, a multivariate regression model was elaborated with variables linked to specific types of sanctions and items of the 2015 financial reporting standards of all the Italian financial institutions involved and we hand-collected data by downloading the financial reporting standards from the websites of each entity and by analysing in depth the information regarding those sanctions. Misconduct, corporate governance and internal control deficiencies, and the dimension of the financial entities are of major concern because this sector is based on trust.

Keywords: Sanctions, Financial Intermediaries, Causes, Corporate Governance, Banca d’Italia, Multivariate Regression Model

Received: 31.07.2017

Accepted: 28.09.2017

How to cite this paper: Giovando, G., & Crovini C. (2017). Corporate governance and internal control deficiencies in financial institutions: Direct causes of sanctions by the supervisory authority. Corporate Ownership & Control, 15(1-1), 277-287. https://doi.org/10.22495/cocv15i1c1p11