How Independent Directors Affect Firm's Performance and Sustainability: an Analysis of Italian Firms

The role of independent directors has been for years in the spotlight of international studies. This phenomenon, which was initially a prerogative of corporations of English-speaking countries, over the last two decades has rapidly spread across Europe, where several countries have introduced specific regulations, borrowing from international best practices. Board independence is thought to buffer the firms against opportunistic behavior (Masulis & Zhang, 2019). This study aims to analyze how independent directors contribute to the decisional processes within Italian boards of directors and to the development of the firms to which they belong. The research hypotheses were formulated based on bibliometric analysis and then they were validated through both a desk analysis and survey data. Therefore, the hypotheses were first connected to the data included within the Assonime reports on corporate governance in Italy in the last 4 years. Then, a quantitative analysis was conducted through a structured survey, administered to a sample of 65 independent directors of Italian firms and belonging to Nedcommunity, the Italian association of non-executive and independent directors, in order to examine the self-perception of independent directors about their own role and effectiveness. This work, combining the structural and the behavioral views, aims at contributing to the literature concerning the impact and the efficacy of independent directors. The findings confirm that the presence of independent directors has a positive effect on corporate performance, on the protection of shareholders’ interests, and especially on the adoption of CSR policies.