Wealth Solutions & Wealth Planning

CFA Institute report gives investing recommendations for Asian family firms

CFA Institute has released a 112-page report which identifies the strengths and challenges of the publicly-listed family firm model in Asia – aimed at outlining to investors areas to focus due diligence on when investing in family-controlled companies.

The report is also a guide that can help family-controlled listed companies in the region maintain financial and economic success following a generational change.

This analysis features case studies on 56 family-controlled publicly listed companies in 14 major jurisdictions in Asia.

It highlights the fact that Asian family firms have played a pivotal role in fueling the region’s economic growth in the last few decades, and their significance is set to rise. It is predicted that by 2025, the number of firms in Asia with revenue exceeding USD1 billion will be nearly equivalent to that of developed economies globally. Family firms will represent 75% to 80% of those entities.

“Sound corporate governance plays a pivotal role for all listed companies,” said Mary Leung, CFA, head, advocacy, Asia Pacific, CFA Institute. “For family-owned firms in particular, the unique model that has made them successful in Asia has also brought about challenges as these companies expand.”

While listed family firms have been a driving force in the economic development and success of Asia, as first-generation entrepreneurs retire, a number of these firms are facing headwinds, including succession planning, globalisation and the need to institutionalise management, among others.

To maintain competitiveness, the report said that Asian family firms have to innovate, expand outside of traditional markets and professionalise their entity but need to tap global talent and capital to achieve it. A robust corporate governance structure will help the family firms meet international standards and investor expectations.

Click here for an Executive Summary of the report - www.cfainstitute.org.