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Ethical practices and regulatory context of family businesses
Plant, Wendy Pratt, Catherine McCann, Joseph
Plant, Wendy
Pratt, Catherine
McCann, Joseph
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n10438.pdf
Adobe PDF, 160.73 KB
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Abstract
Increasing expectations are being placed on privately-held businesses regarding governance and ethical compliance processes. Some of those expectations are created internally as owners and founders attempt to follow “best practices” identified by scholars and consultants. Despite their intended focus on public company practices, other expectations have emerged in response to the regulatory requirements of Sarbanes-Oxley (SOX) and Federal Sentencing Guidelines for Organizations (FSGO). We studied 167 family businesses in two states to determine how extensive “best” governance practices were actually being utilized, particularly those related to boards of directors and ethical compliance processes. We confirm a pattern where larger family businesses are more actively using boards with independent directors, have formal written codes, and utilize more formalized ethical complianceprocesses. Codes in themselves are a good start but are not sufficient. Given the critical importance of having effective compliance processes in place, our results also reveal widely varying practices that may expose family businesses to unnecessary liability. Compliance processes need attention and recommendations are offered to improve their use.
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2011-01
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With permission of the license/copyright holder