Corporate Governance in Family Businesses
Governance problems in a family business are complex. As the firm grows, conflicts of interest between branches worsen, businesses become potentially more complex and more varied, and information asymmetrics become more pronounced.
This means that family businesses need sophisticated and vigilant governance mechanisms like any other company does.
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Anonymous
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I've Seen it Up Close
Well, I have personal experience with governance in a family businesses in an earlier job as Managing Director & CEO for a medium sized company, where the entrepreneur and his family owned the majority of the share. The owner was not involved in the operations officially. However, he was looming around the factory and giving instructions that many times were contradicting to those the operative management had given.
On top of that, in corporate governance the Board of Directors were setup of Ya-sayers and had had the same people for 20 years. No strategic changes presented by the operative management were accepted, while some disastrous investments were made and brought to the board for rubber stamping, once they were already done. I left that position...
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