family business & regulation of global financial market

After Western financial crisis in 2007, most of the corporates are get negative influence of crisis, particularly for family business. The expectation of family business is not only growth or employees, but also stability profitability. 

However, once mention the growth of a company, raising capital would become initially important for mangers. The negative and difficult for family business to raise capital, is that the no measurement to ensure shareholder value. Family businesses are closed environment with no annual account. The other big issue is agency problem, when the founding members or managers server their own needs rather than those of the investors an agency problem. Besides that, the conflict relationship between different arm of families members would be barriers of the measurement. 

How often family business conflict will occur? According to summary from Family Business Institution, 20% of family businesses report weekly conflict, another 20% report monthly conflict, and 42% report conflict three to four times per year. You can draw your own conclusions about the 18% who report no conflict at all! It’s worth noting that not all disagreements raise to the level of conflict. Disagreement is a difference of facts, perceptions, beliefs, or expectations. Conflict is a higher level of disagreement; it’s the belief of two or more people that their positions are mutually exclusive.

The role of the regulator is in public interest who need to corrects for market failure. Meanwhile, it could be be as agency approach to seeing profit, maximizing firms exploiting information advantage. 

The financial crisis that originated in the USA last summer has had major repercussions in 

Europe. Calls for stronger regulation of financial markets and their actors have increased for about ten years ever since the Asian crisis sent shockwaves around the world. As of yet, the extent of the current credit crisis cannot be estimated and central banks continue to be faced by an opaque network of shady credit constructions. The present crisis could therefore serve as a catalyst for tightening regulations globally.  The aims of an integrated global financial market can be achieved only if an efficient global supervisory structure and adequate regulation of complex investment vehicles are developed and given the necessary support.

Considering the future challenges of regulation of financial market, I think there are two aspects, which are considering structure credit risk and tight capital requirement.