importance of corporate governance practices in private family firm
Corporate governance practices in the family-owned companies are mostly this, required to maintain the operational transparency. Thus, the importance of corporate governance practices in private family firms are as follows:
- To build up transparency: Corporate governance can help private family firms to maintain an openness in operational activities. It promotes the private family company to maintain equilibrium between the male manager and the female manager.
- To ensure CSR activity: Implementation of corporate governance will provide the organization to maintain a separate section of corporate social responsibility to perform the social duty by improving the external environment.
- Structural flow: Corporate governance helps an organization to maintain a fundamental flow in the organization. The architectural flow includes developing an audit committee, developing a remuneration committee, and an unbiased recruitment committee.
Corporate governance is also essential in young entrepreneurial firms (specifically IPO firms) because of the following reasons:
- Corporate governance will help the young entrepreneurial firms to adapt complex decision in a more straightforward form
- Corporate governance can be time-saving for the young entrepreneurial firms in making the decision more quickly
- It improves the confidence level of the investor to invest more in the firms