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Examining Family Business Corporate Governance

Info: 994 words (4 pages) Introduction
Published: 10th Nov 2021

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Tagged: Corporate Governance

This dissertation sets out a study of the family business’s corporate governance, addressing the relationship between the owners and the management. Family businesses constitute a wide spectrum of enterprises, from small family owned and managed companies to a large internationally operating family controlled corporations. There are several definitions illustrates the family owned businesses, however the majority agree that Nebauer & Lank definition illustrate the family business in a simple way and puts it as ‘ A firm can be regarded as a family business if a given family holds the voting control of the firm’ (Nebauer & Lank, 1998).

This dissertation argues that, given the duality of the economic and non-economic goals family firms pursue and the complexity of the stakeholders structure, family firms need governance structure that matches the complexity of their constitutes stakeholders. According to that a better research and empirical understanding as how family firms are governed is needed. In this study the focus will be on assessing the level of understanding of the corporate governance concept overall and the codes provided by the Capital Market Authority (CMA), the Capital Market Authority in Oman focusing on strengthen the family owned business by incentives them to go public. The CMA is just recently in the process to create a corporate governance to help the Family business to be prepared to do so. In this study, the focus will be to create an understating and help to create a better code to help the family business sustain in the future. On the other hand there will be an evaluation of the agency theory and how the family owners acceptance of this model. Furthermore a research by McKinsey quarterly shows that 95 per cent fails to succeed the generation due to the lacking of succession planning and roles defining, therefore the dissertation will be evaluating the practice and preparation if any on how the existing owner prepare company’s succession planning rules and codes to handover their responsibilities to their successors.

In this study the focus will be on the family businesses in Sultanate of Oman, a country in the Arabian Gulf with a fledgling capital market. Oman has made significant efforts to improves the level of corporate governance, particularly in the listed companies and now the capital market would like to expand its corporate governance codes to the family owned businesses to strengthen the chances of the sustainability of its growth.

Aims And Objective

This dissertation will focus on the unique corporate governance challenges that any family business faces and propose structures and practices that can mitigate these challenges and ensure the viability of the business. The detailed objectives that guide the dissertation process are:

  • To review and analyze relevant theoretical, and other, streams of literature that focus on corporate governance and family business
  • Analyzing the practice of the existing code of corporate governance that applied by the CMA and if it fit to be implemented in the family business companies.
  • Asses the ownership structure and polices in the companies and testing the theory of the ownership and control separation.
  • Asses the long term planning by the company owners and how the successor is been appointed.
  • To assess the significance, reliability, and validity of the results; to discuss the theoretical, empirical, and practical implications of the findings; to assess the limitations
  • The impact of corporate governance in family businesses performance.

Scope of the dissertation

The present study addresses the governance of family firms, focusing on the nature of various governance mechanisms and how they affect firm performance. Family businesses provide a fruitful research context to study corporate governance due to lack of governance research in the area and the distinctive characteristics of family firms. The family business context, especially, enables the study of how aspects of formal and social control vary according to characteristics of ownership structure.

Research Approaches and method

The methods to gather the required data will be a qualitative, where the participations will be selected based on their history and age of the company in practice. The research will be analyzing their policies and corporate governance practice. Interviews will be placed with the owners and senior managers of the companies to get all the data required for the findings and results.

Structure of the dissertation

Chapter 1: Introduction

This chapter included the background of the study, the aim, purpose of the study, research questions and limitation of the study and it will present the structural framework of the study.

Chapter 2: Literature Review

This chapter will review the historical perspective, theories and related studies of corporate governance, family business and related theories to corporate governance. This chapter will include the secondary data which will be used in discussing the findings.

Chapter 3: Methodology

Chapter describes the methodology and procedures that were used to carry out this study. Furthermore, this chapter will review the population and participants of the study, instruments and data collection procedures.

Chapter 4: Results and Findings

This chapter will present the data and findings related to the research questions

Chapter 5: Data Analysis and Discussion

This chapter presents the data analysis and the discussion of the finding.

Chapter 6: Conclusion

In this chapter, the researcher will present a summary of the study and the findings, conclusion and recommendation.

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Corporate Governance is a term used to describe the way in which a corporation is governed and how operations are controlled. Corporate Governance covers the processes and procedures that employees must follow during business operations.

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