Grounding of Jet Airways: Misgovernance of family business


Published: Business Standard | Date :  May 13, 2019

Expropriation of shareholders’ wealth cannot be detected by applying audit procedures

Jet Airways after flying high for the last 25 years was grounded on April 1. It failed because of poor governance. There are two myths in the context of the governance of promoter-controlled companies.

First, the promoter has skin in the game and therefore, he/she protects and creates wealth. The second is that the promoter understands the business better than outsiders (read, independent directors) and therefore, the board of directors cannot contribute to operating and financing decisions. The story of Jet Airways provides evidence that myths are myths and not reality.

Grounding of Jet Airways: Misgovernance of family business ultima modifica: 2019-05-14T16:31:16+05:30 da imtadmin