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Family businesses have several distinct features that distinguish them from other businesses. This aspect makes it imperative that scholars investigate issues with an additional focus on the interplay of family business dynamics. In this chapter, we explore the issues of power and corruption within family business, with the understanding that prior examinations of this phenomenon were primarily restricted to large public corporations that are not family owned. The key contribution of this chapter is to shed light on the dark side of family business, namely power enabled corruption. We do so by considering three dimensions that are unique to family firms, namely, ownership and control, generations, and governance. In particular, we highlight how these dimensions can facilitate corruption. It is possible that they may also challenge family business that try to detect, deter, and control corruption within their ranks. The lack of objective external evaluation, the ineffectiveness of internal checks, generational issues, family control, and the restricted nature of governance appear to contribute to exacerbating tensions that promote corruption becoming entrenched within family businesses. Following a case method approach, several illustrative examples of cases of power and corruption within family firms are provided, representing different geographic regions of the world, to showcase the widespread nature of this phenomenon. The three family business cases we illustrate (Grupo Odebrecht in Latin America, Sahara Group in South Africa and Foremost Maritime Group in China) represent multiple countries, continents, and geo-political frontiers. Each case illustrates how both corruption and power reinforce each other in family businesses. Implications of the magnifier effect of power on corruption in family business are discussed in terms of its impact, scale, and its enabling effect by providing a road map to corruption.

The 1994 elections had seen a near tectonic change in South Africa. The long run minority White regime was replaced by a majority Black government of the African National Congress headed by Nelson Mandela. He, along with Archbishop Desmond Tutu, did a magnificent job of avoiding a bloodbath and keeping peace between the races. A new Constitution was accepted by 1996 which subscribed to lofty ideals. Yet, they turned sour before long. Aspirations ran ahead of hard realities. Utopia seems to have morphed into dystopia. Greed, prompted by past deprivation, appears to have made opportunists of several while others became blind ideologues. In no time, the country turned to be totally corrupt. This spectacular failure of the system is explained in this chapter.

We empirically investigate the hypothesis that the less transparent (more difficult to value) the target’s assets are the more likely it is that the acquiring firm can obtain higher short- and long-term returns. We analyze a sample of 1,538 friendly acquisitions partitioned in two separate dimensions: acquisitions of public versus private firms, and acquisitions of a firm’s assets versus acquisitions of a firm’s assets and its management. Using a sample of (nondiversifying) real estate transactions with a public REIT as the acquirer, we find that acquisitions of public firms have insignificant short-term abnormal returns. Acquisitions of private targets have positive and significant short-term abnormal returns. The acquirer’s abnormal returns are higher in both cases when the transactions involve acquisition of the target firm’s management. We find parallel results when analyzing the acquirer’s Q over the merger year and the three following years. Our conclusions are robust to the type of financing (cash, stock, or a combination) used in the acquisition.

This study aims to study the impact of corporate governance (CG) versus ethical investment on the firm performance. It takes into account the firms of Bangladesh, India, and Pakistan for the purpose of the study. A composite variable of CG index and environmental, social, and governance (ESG) index is used to test the impact on the firm performance. Separate country wise and overall analysis is obtained. Regression analysis is used to obtain the results. Two measures of performance are used, one is return on assets (ROA) and other is Tobin Q. The findings of the study reveal that there is an impact of corporate governance index (CGI) on firm performance (overall and country wise) whereas ethical investment (EI) has an impact on firm performance when tested overall and no impact when checked for country wise results. The results further show that on country level, increase in CG measures may lead to positive results, but at the macro level, it may lower the performance. On the other hand, at the micro level, ethical finance may not show its impact; however, at the macro level, it has an impact. The study has implications for the investors and policymakers.