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Extant literature has usually argued that firms that unify dual class shares are likely to increase shareholder value. We examine the universe of Italian dual class unifications over the 1974-2005 period and show that the unification process is considerably more complex than described in prior literature. In over half the universe, Italian voting shareholders are not compensated for allowing their voting rights to be diluted, and, not surprisingly, experience a price decline at the announcement of unifications. While non-voting shares appreciate in value at the announcement there is little evidence that the unification increases total firm value. We argue that share unifications are designed to benefit the controlling shareholders and, in several cases, controlling voting shareholders use the unification to expropriate wealth from minority shareholders.

Italian corporate governance is characterized by advanced regulations (equalling or exceeding the continental European average) but a low degree of enforcement. The ownership structure of listed companies is highly concentrated, and public companies with dispersed ownership are rare. Most of the time, a majority shareholder (a family, a company or the government) controls a relevant stake of voting rights and exercises full control of the company. Legal devices such as pyramidal groups, non-voting shares and voting agreements are relatively widespread and allow separation of ownership from control, especially in family groups. It follows that the typical agency conflict is not between managers and shareholders, as in the United States or the United Kingdom, but between majority and minority shareholders.

This paper tries to offer a review of the literature on the main privatisation methods adopted by the Central and East European Countries which have joined European Union in 2004. After having analysed the major advantages and shortcomes of each privatisation method the paper briefly describes the privatisation processes adopted by each single country.