What is Corporate Governance?
Corporate governance refers to the processes, structures, policies and laws that govern the management of a company. It also refers to the way the Board oversees the operations of a company and about how board members are accountable to the company and its shareholders. The key purpose of corporate governance is to promote accountability, transparency, fairness, disclosure and responsibility - core values that are relevant to the success of all businesses, irrespective of where they come from.
Companies with sound corporate governance usually perform better than other companies. Good corporate governance results in:
• Better access to external capital
• Lower financing costs
• Higher credit ratings
• Strong investor confidence
What is the importance of Family Businesses in the economy -
Family businesses are the backbone of many economies around the world. Their sustainability is critical to global economic growth. Some of the largest companies in the world including Wal-Mart, Ford, Carrefour, BMW, Samsung and Motorola, including top Indian companies like TATA Group, RELIANCE Industries etc. are family firms. In the Middle East region, they account for 95 per cent of all private sector companies. As such, family firms play a vital role in economic development not only through their business contributions but also by creating an investment environment that is open, safe, secure and transparent.
Why Corporate Governance is Crucial for Family Firms?
The governance of a family business is more complicated than for non-family owned companies because of the central role of the family that owns and typically leads the business. In a family business, the business, the family, and the ownership group all need governance. Increasing growth and globalization has brought many challenges for family businesses. The way one deals with them can mean the difference between success and... [continues]
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(2011, 12). Corporate Law. StudyMode.com. Retrieved 12, 2011, from http://www.studymode.com/essays/Corporate-Law-866591.html
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"Corporate Law." StudyMode.com. 12, 2011. Accessed 12, 2011. http://www.studymode.com/essays/Corporate-Law-866591.html.