The Importance of Corporate Governance in Family-Owned Companies

Launching CIPE's Corporate Governance Guide for Family-owned Companies in Pakistan.

The adoption of good governance practices is beneficial to listed companies, unlisted companies, and family-owned enterprises.

Good governance practices strengthen companies by building relationships among investors, boards of directors, managers, and employees. Implementing corporate governance guidelines allows businesses to obtain capital at lower cost, enhances business strategy, and attracts the best human capital.

Corporate governances also promotes competitiveness in the marketplace and is an antidote to corruption. Effective corporate governance also helps ensures the integrity of business operations and strengthens the rule of law and democratic governance by promoting values of accountability and transparency.

In the last decade, Pakistan has experienced a sizeable increase in the number of unlisted companies, particularly family-owned organizations. These enterprises form the backbone of Pakistan’s economy and growth; the need for corporate governance guidelines for these particular types of companies has never been greater. Instituting good governance practices is particularly effective in overcoming the challenges many family-owned enterprises face.

CIPE partnered with the Pakistan Institute of Corporate Governance (PICG) and the Institute of Chartered Accountants of Pakistan to assess sectoral needs and develop the Corporate Governance Guide for Family-Owned Enterprises, the first guide of its type in Asia.

To learn more about the benefits of instituting good governance practices for family-owned enterprises and how one Pakistani company improved its governance and its performance, read the latest case study from the forthcoming collection of Strategies for Policy Reform.

Teodora Mihaylova is Research Coordinator at CIPE.

Published Date: October 30, 2014