FAMILY FORTUNES

THE invasion of foreign institutions has not ruffled the feathers of Hong Kong's largely family-run listed companies. Most of Hong Kong's family firms continue to operate in traditional ways, making for streamlined decision-making - but at the risk of being unresponsive to shareholders.

Family businesses account for more than 90 per cent of locally-listed companies and include those owing their success to one mercurial entrepreneur, such as Li Ka-shing or Stanley Ho, or to a family power bloc such as the Keswick brothers of Jardine or the Lau brothers of Evergo.

So far, the substantial interest from US and Japanese brokerage houses in Hong Kong companies has been in the form of long-term investment rather than hostile takeover bids.

Family-run businesses are an integral part of traditional Chinese society, but few companies survive the handover to the next generation. Analysts say the second generation of local tycoons, especially those educated overseas, tends to be liberal in its management style. This may mean the conservative image of local family-run companies will change as the next generation of business leaders assumes control.

In general, Hong Kong companies are tightly run by families. Unlike the United States, management control tends to be centralised.

''Small shareholders enjoy more protection which requires companies to give more disclosure information. As an international financial centre, the rules must become more Western to attract overseas investors,'' said Ng Kong-yong, an analyst at Standard Chartered Securities.

He cited the example of banks, which are not required to disclose their inner reserve under existing rules. The degree of company disclosure is comparatively low to that in the US.