‘The reluctance of family-owned firms to open their equity to outside shareholders has to some extent constrained the development of the capital markets in the Middle East,’ says Alissa Koldertsova, a policy analyst at the Paris-based Organization for Economic Cooperation and Development (OECD).
Examples are provided from several locations in Asia. For example:
Gome Electrical Appliances, one of the largest privately owned electronics retailers in China, serves as a prime example of a private, family-owned company struggling to survive under weak governance practices. Huang Guangyu, the company’s billionaire founder and its biggest shareholder, is serving a 14-year sentence in a Chinese prison for illegal business practices. In late September, he tried to increase his family’s control over the company from prison by submitting a proposal to have his younger sister and his lawyer installed as directors. The proposal failed.
Read more: Asia’s Corporate Governance Challenge.