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In 2003, Parmalat Group, Italy’s eighth largest company, and which is ranked among the top ten international food products companies, collapsed and entered bankruptcy protection after disclosing that nine billion dollars were was missing from its accounts. Its management and controlling shareholder were then indicted for fraud. Parmalat’s global investors around, especially in Italy and the United States suffered severe losses as a result of that fraud (Segato, 2006).
Melis (2005) stated that “the ownership and control structure of Italian listed companies is characterised by a high level of concentration, and by the presence of a limited number of shareholders, linked by either family ties or agreements of a contractual nature (i.e. shareholders’ agreements), who are willing and able to wield power over the corporation. Parmalat was a complex group of companies controlled by a strong blockholder (the Tanzi family) through a pyramidal device;” and “despite ownership disclosure rules, the structure of the group is not easy to trace, especially at an international level. This is not unusual among large Italian groups” (p. 479).
Based on the required readings and research, discuss:
Sources used in the development of the Parmalat Mini Case Study (not required reading!):
Melis, A. (2005). Corporate governance failures: To what extent is Parmalat a particularly Italian case? Corporate governance, 13(4); 478-488.
Segato, L. (2006). A Comparative Analysis of Shareholder Protections in Italy and the United States: Parmalat as a Case Study. Northwestern Journal of International Law & Business, 26(2), 373-446.
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