Corporate Governance Practices of Family Enterprises: A Study on Some Selected Indian Family Governed Companies

Abstract

Corporate governance implies how an organization is directed and controlled under a set of mission, values, and philosophy (Cadbury, 1992). But unfortunately, over time, the common investors all over the globe have suffered a lot in the hands of the greedy managers and scams like Enron, Adelphia, Tyco, Worldcom, Xerox, Paramalt, and Satyam have shattered the trust in the very mechanism of corporate management and governance. However, despite a lot of initiatives had been taken around the world in the form of codes/laws for ensuring good governance for corporate sector, the issue of governance practices of family enterprises operating in India had not been discussed in detail. But, in view of the contribution of the family enterprises to Indian Economy over the years, a renewed interest on their governance mechanism is the need of the hour. Starting from Tata to Birla, Ambani, Goenka, Ruia, Mittal etc. Corporate India had a long heritage of domination of family governed firms. They contribute significantly towards economic growth of the country, employment generation, boosting up Gross Domestic Production as well as accumulation of foreign reserve through growth in export and also engaged into cross border Merger and Amalgamations. However, time and again the issues of governance and succession policy had perturbed the smooth sailings of these family governed firms in India. Recent examples like clash between Ambani brothers, inheritance issues in Birla clan proved that case. Against this backdrop the present study is a humble attempt to enquire the state of affairs of corporate governance in major family governed firms in India.