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Friday March 29, 2024

Rules of business

April 10, 2020

The subject of business deals with the notion that the ultimate objective of every firm is to boost its shareholder’s wealth. This wealth is going to increase at others cost even. Two forms of ownership prevail all around the globe, which are concentrated and dispersed. The former structure of ownership mostly prevails in Pakistan, as the wealth of businesses is concentrated among few family owners. These family members hold their business directly and indirectly. The indirect methods of holding these firms are pyramids, cross-shareholdings, and deviation from one share one vote, the example of which is a recent sugar scandal. The presence of these control mechanisms witnesses about the existence of poor governance mechanism of our government institutions. These family members are ultimate controlling owners who influence the decisions by holding even less amount of wealth through different control chains.

The recent sugar scam in Pakistan raises questions about the poor external governance mechanisms of government institutions. However, the disclosure of the recent report about the scandal is a good initiative by the PTI government. In knowledge-based economies, the ultimate owners are controlling economies through human capital. That should be our point of concern in the future. Because if the human capital of our country has the alignment of interest with the objectives of a nation then they will not pursue their private goals at public cost.

Jawad Asif

Gujrat