This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Robb, A. J. Articles by Lord, B. R. Search for Related Content Social Bookmarking                         What's this?

Ernest Adams Ltd: the demise of a family business

Yvonne P. Shanahan

Beverley R. Lord

University of Canterbury

This article tells of the changes experienced by a family business, through restructuring under outside professional management, until being taken over by a multinational company. Evidence was collected from interviews, annual reports and media articles. As a family business, the company exploited lower agency costs and sustained its profitability. Debt levels remained low. Under external professional managers, profitability declined and debt levels rose sharply. Informal communication networks were no longer utilized, and the professional managers were subject to criticism for excessive spending, inappropriate skills and a lack of industry knowledge. The board of directors began to function less effectively. Poor performance led to restructuring under three different CEOs, yet costs continually increased, profitability declined, and a takeover bid was successful. However, all responsibility, of course, cannot be placed on the new professional managers, who inherited responsibility for some decisions made prior to their period of stewardship. Also the family did not adequately plan for successful transition to professional management.

Accounting History, Vol. 11, No. 3, 357-379 (2006)
DOI: 10.1177/1032373206065866


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?