Corporate Governance in Downturn Times: Detection and Alert - The New Italian Insolvency and Crisis Code

Patrizia Riva, Alessandro Danovi, Maurizio Comoli, Ambra Garelli and Ambra Garelli

A chapter in Crisis Management - Theory and Practice from IntechOpen

Abstract: In its life cycle, an enterprise may experience periods of crisis. If the crisis is monitored promptly and appropriate measures are taken, not only may the enterprise continue to operate but it may also be able to seize opportunities for growth. The Italian legislator is introducing a procedure aimed at supporting companies to detect the very first warning signs of a crisis. The supervisory board of auditors, the audit firm, and certain qualified creditors will have the right and duty to start the early warning procedure ("allerta"). The board of statutory auditors (Collegio Sindacale) plays a fundamental role: its ex-ante supervisory and control activities over management allow it to effectively play an important role as main recipient of any crisis warning signs. The new regulatory framework lays down certain indicators and critical thresholds, which may trigger the alert process. Initially, the Delegated Legislation (Bill No.3671-bis) sets forth certain specific financial indicators. The new bill (Crisis and Insolvency Code) on the contrary refers to a more complex and sector-specific system of indicators. The findings of an empirical research conducted by analysing a sample of more than 600 enterprises and testing the discriminating capacity of the indicators initially considered are presented herein.

Keywords: crisis; insolvency; alert measures; board of statutory auditors (Collegio Sindacale); audit firm; crisis settlement body for companies (OCRI from its Italian initials); performance measurement; crisis indicators; Italian crisis and insolvency legislation; crisis thresholds; European directive on preventive restructuring frameworks and insolvency (COM (2016) 723); UNCITRAL (search for similar items in EconPapers)
JEL-codes: H84 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ito:pchaps:139476

DOI: 10.5772/intechopen.74964

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