Corporate Governance and Family-Owned Businesses. Professor Chris Pierce Bahrain February 2010. What are family owned businesses?. There are different definitions……… Family owned businesses are companies … … where the dominant shareholder is a family member ( broad view )
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Professor Chris Pierce
There are different definitions………
Family owned businesses are companies …
… where the dominant shareholder is a family member (broad view)
… which are run by heirs of the people previously in charge, or by families that are clearly in the process of transferring control to heirs (narrow view)
S & P 500 index and 40 % of the 250 largest companies in France and Germany are family businesses.”
Formalize. Create Advisory Board
Transition to Board of Directors
Strengthen Disclosure & Control Environment
Protect Rights of Shareholder & Stakeholders
Keep an eye on these rules and regulations from day 1
Need to distinguish family and company relationships
Informality of governance policies
Weakness of control environment
Managing growth: More complex with succeeding generation
For the family-owned business, good governance makes all the difference.
Family firms with effective governance practices are more likely to do strategic planning and to do succession planning.
On average, they grow faster and live longer.
*Source: A fourth-generation family leader
C. CONTROL ENVIRONMENT AND PROCESSESS