Edited by Panikklos Zata Poutziouris, Kosmas X. Smyrnios and Sabine B. Klein
Chapter 17: Generic Models for Family Business Boards of Directors
Joseph H. Astrachan, Andrew Keyt, Suzanne Lane and Kristi McMillan Many laws and proposals from around the globe are trying to address board practices that have allowed massive corporate failure. While valuable for large public companies, they may be harmful to family-owned businesses because they stem from a market model rather than a control model of corporate governance, and ignore the issue at the heart of corporate governance problems today: accountability. It is our proposition that the unique characteristics of control-model companies require a diﬀerent approach to corporate governance than market-model companies. Control-model companies must focus on the unique need of the boards to have the competencies to be held accountable, and hold others accountable, for their actions. This chapter provides recommendations and propositions testable by future research that will lead to greater board accountability and, in turn, positive identiﬁable results in board and company performance. Introduction Governance reform of publicly held corporations is the white-knuckled topic de jour among denizens of board rooms, federal oversight bodies, the halls of academia and newsrooms. Indeed, the recent nearly daily onslaught of reports of unethical and criminal conduct, fomented by a greed and lust for power, by certain CEOs, CFOs, board members and other corporate chieftans – from the Enrons to the Global Crossings of America’s Blue Chip business landscape – has triggered endless calls for change. Many corporate leaders, acting of their own volition, already have reconﬁgured the moral compasses by which future executive conduct is to be reckoned (Donaldson,...
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