We need more independent directors on boards, more women, greater transparency and even better command of the English language, which is often underestimated by companies. This is what institutional investors are asking of the smallest companies among those listed on the stock exchange, according to one research conducted by Consob and Ir Top both on the MTA (out of 72 issuers in the STAR segment and 88 companies in the FTSE Italia Small Cap index) and on the 103 listed on the AIM. The latter have a total capitalization of 7,4 billion, while those of the regulated market of Piazza Affari are worth more than 10% of the total capitalization on Borsa Italiana.
According to what emerges from the survey, these companies all have the predisposition to be firmly controlled by the first shareholder: in 63% in the case of the Small Caps of the MTA and in 55% in the case of the AIM, the share of the first shareholder is higher than the 50%. And this translates into a scarce presence of independent directors on the boards of directors: on the MTA, in the 153 companies examined, there are on average 4, i.e. less than half of the total board, and the percentage drops significantly on the market AIM, where independent members are 1,6 on average, i.e. one out of four. Not to mention the presence of women, an issue underestimated in this case by both companies and institutional investors: at the end of June 2018, women are present in all MTA companies (except for two cases) and represent 36,4% of the board, but in 40% of companies listed on the AIM there is not even a woman on the board and the average is just 12,7%.
Institutional investors are therefore asking for more representation, also in light of the fact that their weight is not negligible: they are present in 60 companies including STAR, Small Cap of the MTA and AIM, with a weight of a quarter of the total value and an average stake of 9% for Italian funds on AIM, while foreign ones prefer to invest in the MTA, where they are present in 28 companies with an average stake of 7,5%.
The other deeply felt issue that emerged from the Consob and Ir Top analysis is that of transparency. Apart from the STAR companies, which like those of the Ftse Mib are obliged to publish quarterly financial statements, for all the others, financial communication remains little more than an option: 58% of Small Caps and even only 17% of SMEs listed on the AIM, where moreover only 8 companies out of the over 100 in the list presented a Sustainability Report, not at all mandatory but always appreciated by investors. Indeed, the survey shows that institutional investors consider only the accounting information of the STAR segment to be good, while for Small Caps and AIM it is "sufficient" in 71% and 63% of cases, respectively. The presentation of an industrial plan would also be very welcome to large investors: only one out of three MTA companies examined produced one in 2018, and only 22% of AIMs.
Finally, English. An old Italian habit, especially in small companies, perhaps family-run and still not very oriented towards seriously internationalizing their business. Questioned by Consob and Ir Top, the companies examined have candidly admitted that he does not consider mastery of the English language fundamental. But institutional investors don't think so, and the data seem to prove them right: on the AIM, only one company out of 10 translates its financial statements into English, 30% also send press releases in English and 23% write a presentation in English for investors. As for Small Caps, they produce 38% of financial statements, 47% of press releases and 31% of presentations in English. A little better, but still too little.
“Listing – commented Anna Lambiase, managing director of Ir Top – imposes on the issuer an information behavior outlined by the legislation and market practices which must take into account the needs of the investor and of information parity among stakeholders. For all investors, maintaining a constant transparency profile on business development is perceived as the most important factor for strengthening investor confidence. Voluntary disclosure is more frequent on the MTA. Companies that are covered by at least one financial analyst are 26% on MTA, 51% of AIM issuers. In the survey conducted on a target of PIR Portfolio Managers, with regard to governance aspects, investors and companies express a positive judgment on the effects of the ownership/management coincidence on performance analysis and delivery".
