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Ownership structure and financial default risk in Italian private firms

Velia Gabriella Cenciarelli

Financial Reporting2025https://doi.org/10.3280/fr202520028article
ABDC C
Weight
0.50

What the paper says

Purpose: This study investigates the relation between ownership structure and fi-nancial default in private firms, focusing on two key dimensions: ownership concen-tration - the share held by the top three shareholders – and institutional ownership – the share held by institutional investors. Design/Methodology/Approach: The empirical research augments traditional de-fault prediction model with ownership structure indicators, using an unbalanced panel of 28,562 Italian private firm-year observations from 2012-2019. Findings: The results show that ownership concentration has a significant positive association with default likelihood, while institutional ownership reduces the prob-ability of default. Further, I find that default prediction models including ownership structure variables have a higher predictive ability than the traditional default pre-diction model. Originality/Value: This study contributes to the literature on ownership structure and financial default by providing empirical evidence on private firms, a setting where market-based predictors are unavailable. It shows that ownership concentra-tion and institutional ownership systematically influence financial stability and im-prove default prediction accuracy. Practical implications: This study suggests that ownership structure indicators can be integrated into credit risk assessment and early warning systems, as promoted by recent European Union insolvency frameworks, to strengthen monitoring of finan-cially distressed private firms.

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https://doi.org/https://doi.org/10.3280/fr202520028

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@article{velia2025,
  title        = {{Ownership structure and financial default risk in Italian private firms}},
  author       = {Velia Gabriella Cenciarelli},
  journal      = {Financial Reporting},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.3280/fr202520028},
}

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Ownership structure and financial default risk in Italian private firms

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.