...Abstract The present paper aims at reviewing the various developments in Corporate Governance in India. Corporate Governance has gained a lot of importance and momentum the world over. The objective of any corporate governance system is to simultaneously improve corporate performance and accountability as a means of attracting financial and human resources on the best possible terms and of preventing corporate failure. In short Corporate Governance is about promoting corporate fairness, transparency and accountability. Keywords: Corporate Governance (CG) Security and Exchange Board of India (SEBI) Stakeholders Clause 49 OECD principles Chapter: 1 INTRODUCTION 1.1 Prelude Corporate governance (CG) has emerged as a very important ideal. The reason is, today companies are substantially contributing to the overall growth and development, particularly in emerging economies such as India and a healthy investment environment is vital. The corporate form of business has succeeded gradually and expanded worldwide. However, not all companies are managed successfully. There has been a spree of corporate frauds worldwide, e.g., Enron in the United States and Satyam Computers in India. The latter had accounting and auditing flaws apart from lack of accountability and oversight by Independent Directors at Board meetings. There was no whistle-blowing in case of Satyam Computers unlike Enron. The Satyam Computers revelation was an outcome of a takeover...
Words: 4791 - Pages: 20
...by the actions or policies of an organization. Corporate Governance is nothing but a framework for creating long term trust, between company and stakeholders. It must be noted, failure of corporate governance in case of SATYAM COMPUTERS SERVICES LTD. in India has provided opportunity to focus on this subject again. It’s important to know, the Good Corporate Governance includes five principles namely: Transparency, Accountability, Responsibility, Independency, and Fairness. This paper focuses on the importance of corporate governance and perception of investors towards it in the corporate sector. We have made efforts to show, the perception of investors in various surveys conducted about corporate governance. So data used in this paper is from secondary sources. The Result which we derived from surveys is contradictory…like... Indonesian survey reveals investors do not take into account corporate governance policy of company for making investment decision, while as per one Indian survey, major investors perceives corporate governance reports to be very useful for investment decision. It was concluded from one another Indian survey, major respondents believes penalty levels are low for not obeying the governance laws. And so most of them also agreed, corporate governance audits to be done only by corporate governance specialist. Lastly, it’s necessary to describe “What India must do” for dealing with corporate governance disclosure. In this roles of various concerned parties are...
Words: 470 - Pages: 2
...bear on both India and China. For most Chinese and Indians alike, economic life is hard despite the fact that reforms and globalisation have created various new opportunities and as such both countries have witnessed an emerging middle class with Americanised tastes and preferences, irrespective of this however, both countries remain very poor. Although the two countries went to war in 1962 due to some border dispute, they have since tried to normalise relations and in 1995 for the first time trade had exceeded US$1 billion between them. They have lately received a lot of international attention being viewed as emerging giant economies as they both play key roles at the international level. For example China has been a permanent member of the Security Council at the UN, while India who has lead the Non-Aligned Movement for years and is still vying for a similar position. Furthermore, India has been one of the founding members of the WTO and has played a prominent role as one of the developing nations whereas China has had to fight for decades to obtain its admission into this international organisation. While both China and India have an extended history of international trade going back centuries ago, both their economies were until recently highly protected and controlled to a large extent albeit that their political systems are very different. China is still a very unique case in the sense that while it has allowed its economy to be opened to Capitalists MNCs, it is still governed...
Words: 5205 - Pages: 21
...Research Seminar in Corporate Governance, MBA 3rd Trimester, UGC, January 15, 2014 Presented By: Group 5 Samiksha Neupane,Sagun Prajapati, Samipa Dahal, Shreesh Parajuli,Sudeep Nepal A Synopsis on:Corporate Governance in Banking System:An Empirical Investigation Authors: Abhiman Das and Saibal Ghosh About the authors:Mr Abhiman Das has worked as a assistant adviser in department of statistics and information management of Reserve bank of India. He has released several research paper in the field of economics also.Mr Saibal Ghosh has also worked as a higher level official in Reserve Bank of India and has released several research papers. Abhiman Das Research Context Virtually every major industrialized economy and major international organization has made efforts in recent years to refine their views on how large industrial corporations should be organized and governed. Academics in both law and economics have also intensely focused on corporate governance [La Porta et al1998]. Despite the growing literature in the field very little attention has been focused on the issue of the corporate governance, especially in banking organizations [Shleifer and Vishny 1997]. This is particularly strange in light of the fact that a significant amount of attention has been paid to the role that banks themselves play in the governance of other sorts of firms [Macey and O’Hara 2003]. The corporate governance of banks in developing economies is important for several reasons. First, banks...
Words: 1754 - Pages: 8
...E-governance: Dream of the nation M. Shoeb Chowdhury Globalisation is the process of increasing connectivity and interdependence of the world's markets and businesses. In the last three decades, two driving forces -- advances in telecommunications infrastructure and the rise of the information technology, and its rapid productivity growth in the global economy -- played a key role in accelerating the pace of internationalisation. Information Technology (IT) dramatically changed traditional business and working patterns in the 1990s. Companies are now redistributing their businesses and jobs around the world. We know that Electronic Governance (popularly referred to as e-governance) is one of the most significant tools for shaping business and economics today. According to The Economist's print edition, February 14, 2008: "Countries like India may leapfrog the rich world. As it becomes clear that getting entrenched rich-country bureaucracies to move towards e-government will be slow and difficult, hopes are turning to poorer countries. Not that their bureaucracies are intrinsically more promising. Even under British colonial rule, Mahatma Gandhi was a severe critic of Indian officialdom. His words of advice are displayed in public offices all over India: "Who is a customer? The customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an outsider in our...
Words: 1166 - Pages: 5
...creating long-term trust between companies & the external provides of capital | 19 | d. He has to ensure that his work involves exercise of judgment. | 20 | b. Stewardship Theory | Section B: Short Notes | Question | Answer | 11(continued)1(continued) | Clause 49The term ‘Clause 49’ refers to clause number 49 of the Listing Agreement between a company and the Stock Exchanges on which it is listed. The Listing Agreement is identical for all Indian Stock Exchanges, including the NSE and BSE. This clause is a recent addition to the Listing Agreement and was inserted as late as 2000 consequent to the recommendations of the Kumar Mangalam Birla Committee on CG constituted by SEBI in 1999. Clause 49, when it was first added, was intended to introduce some basic CG practices in Indian companies and brought in a number of key changes in governance and disclosures (many of which we take for granted today). In late 2002, the SEBI constituted the Narayana Murthy Committee to “assess the adequacy of current corporate governance practices and to suggest improvements.” Based on the recommendations of this committee, SEBI issued a modified Clause 49 on October 29, 2004 (the ‘revised Clause 49’) which...
Words: 4860 - Pages: 20
...SHC 3083 Business Ethics and Corporate Governance Section 2 Case study on Governance Failure at Satyam NAME | I.C NUMBER | MATRIC. NUMBER | BONG LUI LUI | 910710-15-5078 | AH100063 | EILEEN WONG PAK YEE | 911107-13-6184 | AH100066 | LAI JIA SIN | 901026-05-5500 | AH100072 | LIM SIN RUI | 910412-02-5152 | AH100074 | LINDA CHAN CHIN HUA | 910522-13-5360 | AH100075 | Table of Contents 1 Introduction 1 1.1 Summarization 1 2 Key Player 3 2.1 B. Ramalinga Raju and B. Rama Raju 3 2.2 Rammohan Rao 3 2.3 Auditors 3 2.4 Bank 3 2.5 Gopalakrishnan and Srinivas Talluri 3 3 Main issue 4 3.1 Weakness of corporate governance 4 3.2 Greedy of external parties 4 3.2.1 Pricewaterhouse Coopers (PwC) 4 3.2.2 World Bank Staff 5 4 Implication 6 4.1 Implication towards company 6 4.2 Implication towards stakeholder 7 4.3 Implication towards economy 8 4.4 Conclusion of Implication 8 5 Discussion 9 5.1 Theory of Ethics 9 5.1.1 Governance Failure and Resignation 9 5.1.2 Secretive Whistleblower 10 5.2 Moral Values 11 5.2.1 Responsibility as a chairman 11 5.2.2 Responsibility as board of directors 12 5.2.3 Loyalty and Truthfulness 12 6 Conclusion and Recommendation 14 6.1 Role played by corporate governance mechanism 14 6.2 Responsibilities and ways to prevent fraud 14 References 16 Introduction We are studying a fraud case which happened at Satyam. In this case study, we will divide into few parts to do analysis. First...
Words: 4498 - Pages: 18
...capabilities, but are also a reflection of the formal and informal constraints of a particular institutional framework that managers confront (Peng, Wang & Jiang, 2008). The institutional-based view focuses on nation’s political, regulatory and social aspects and their impact on the business environment MNEs interact with. These aspects significantly shape the strategy and performance of the firms – both domestic and foreign – in developing countries, where typically the rules of the game are changing or not completely known (Peng, Wang & Jiang, 2008) To support the strategy tripod framework, the authors outline four different cases, grounded in the context of emerging economies: antidumping as entry barriers, competing in and out of India, growing the firm in China, and governing the corporation in emerging economies. Regarding antidumping as entry barriers, the example discussed is related to a steel producer who enters into a new geography (Texas) by applying a price dumping strategy. The point made by the authors is that depending on the nationality of steel producer – domestic or foreigner –, incumbent companies would react very differently. In fact, if the new entrant were domestic (from Ohio in the example), incumbents would likely react by adopting a mix of industry- and resource-based strategy. In...
Words: 1094 - Pages: 5
...Yoon Han HI331 Prof. Curley November 3rd, 2014 The Empire of Good Intention The video, The Empire of Good Intentions, presents a complete account of the idealistic British Empire’s presence in India. Simon Schama reveals the fundamental aspects of governing principles of the Empire in India. He shows the effect of the free market economies and the liberal politics on the presence and the influence of British Empire in India. Some transformational occurrences in India such as the mutiny and Irish Potato Famine are greatly highlighted. As a result, the attempts of Britain to civilize Indians and simultaneously transform them into British people through education and legal reforms are the main points demonstrated in the video. The video indicates the way, in which the noble principles of the British Empire were not appropriate for handling the situations in India. Although the empire was supposed to provide benefits associated with Western civilization, the inhabitants of Ireland and India endured poverty because of the laissez faire economic policy. The lack of religious sensitivity, famine and mutiny resulted in the conflict between Indians and Britons. Moreover, the great Irish potato famines led to mass migration from Ireland to New Zealand, Australia, Canada and America. According to Simon Schama, Britain witnessed the establishment of the liberalism ideology and fast development of political institutions in the mid-19th century. As Britain continually developed and...
Words: 1237 - Pages: 5
...Introduction Indian economy had experienced major policy changes in early 1990s. The new economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient. With the onset of reforms to liberalize the Indian economy in July of 1991, a new chapter has dawned for India and her billion plus population. This period of economic transition has had a tremendous impact on the overall economic development of almost all major sectors of the economy, and its effects over the last decade can hardly be overlooked. Besides, it also marks the advent of the real integration of the Indian economy into the global economy. This era of reforms has also ushered in a remarkable change in the Indian mindset, as it deviates from the traditional values held since Independence in 1947, such as self reliance and socialistic policies of economic development, which mainly due to the inward looking restrictive form of governance, resulted in the isolation, overall backwardness and inefficiency of the economy, amongst a host of other problems. This, despite the fact that India has always had the potential to be on the fast track to prosperity. Now that India is in the process of restructuring her economy, with aspirations of elevating...
Words: 319 - Pages: 2
...The great Indian family business The Indian family business dates back to the latter half of the 19th century, which also marks the beginning of business in India. It is not surprising then that family-run businesses currently account for a whopping 95 per cent of all Indian companies. Considering that one-third of the companies listed in Fortune 500 fall under this category, including the currently second Wal-Mart, family businesses have indubitably cemented their place in the world economy. The Indian economy, currently in a state of rapid development, is burgeoning with innumerable small and medium-sized family-run enterprises. Family businesses in India initially started in the 1890s as a means to promote import substitution and attain economic freedom from the British. These enterprises were an integral part of India’s freedom struggle, and as part of the Swadeshi movement, got special treatment and subsidies from the government. The businesses consolidated their positions as near monopolies under the protective environment of the licence raj and their inefficiencies did not get exposed to the indefatigable market realities. Some of the prominent business families during the 1960s were the Modis, Thapars, Shrirams, Singhanias, Birlas, Wadias and Godrej. The new economic policy In 1991, India’s forex reserves dwindled rapidly and the IMF extended help but at a price, forcing India to open its markets to the outside world. With...
Words: 1082 - Pages: 5
...with its emergence in the global market as opposed to its restricted economy of labour, capital and knowledge. However these inconsistencies are caused by the contradictory national and managerial mindset goes on to the confidence Indians have in their abilities and future. Bever et al (2005) found, in a study by McKinskey Quaterly, that Indian managers tend to be more optimistic as compared to the others, whereas in reality, it has been seen in only a few industries and corporations. The reason for these inconsistencies could be due to the history and culture behind the management styles. For instance, they are shaped by family dominance, rigid bureaucracy in government structures, and absence of professionalism in managers. Some areas that need attention are ethical indecency, labour laws and human resource management that should be attended. Also of equal consideration is the protectionist culture inspired by socialist economics, which was formed after independence in 1947, when the government-bred regulations fenced the influx of foreign opposition. It created inefficiencies and status-quo that triggered corruption and poor governance (Davis et al., 2005) However, evidence show India’s potential channeling into performance. This transformation can be fostered by the prominent global industries like software services, automobiles, bio-technology and pharmaceuticals. Ranking as the fourth largest economy, with GDP worth $4.06 trillion as of 2011, managers in these...
Words: 2745 - Pages: 11
...Corporate Governance What is Corporate Governance? Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include labor(employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large. Objectives & Principles : Corporate governance is a major concern in the Asia and Pacific region, especially in the aftermath of the 1997 Asian financial crisis. The size and frequency of recent corporate governance debacles show that poor governance is not only a formidable hurdle to surmount but is also at the forefront of economic development issues. Ten core principles have been listed by Asian Development Bank (ADB). An attempt has been made to model the principles in a manner consistent with global best practice. Principle 1: Performance Orientation The principal objective of business enterprises is to enhance economic value for all shareholders by making the most efficient use of resources. A company that meets this shareholder value creation objective will have greater internally generated resources, improving its prospects for meeting its environmental, community, and social...
Words: 2392 - Pages: 10
...Indian Financial Sector Reforms: A Corporate Perspective Jayanth R. Varma Reproduced with the permission of Vikalpa, the journal of the Indian Institute of Management, Ahmedabad, in which the paper was first published (January-March 1998, 23(1), 27-38). Ó Vikalpa (http://www.iimahd.ernet.in/vikalpa). All rights reserved Until the early nineties, corporate financial management in India was a relatively drab and placid activity. There were not many important financial decisions to be made for the simple reason that firms were given very little freedom in the choice of key financial policies. The government regulated the price at which firms could issue equity, the rate of interest which they could offer on their bonds, and the debt equity ratio that was permissible in different industries. Moreover, most of the debt and a significant part of the equity was provided by public sector institutions. Working capital management was even more constrained with detailed regulations on how much inventory the firms could carry or how much credit they could give to their customers. Working capital was financed almost entirely by banks at interest rates laid down by the central bank. The idea that the interest rate should be related to the creditworthiness of the borrower was still heretical. Even the quantum of working capital finance was related more to the credit need of the borrower than to creditworthiness on the principle that bank credit should be used only for productive...
Words: 7570 - Pages: 31
...History Satyam Computer services Limited an Information Technology Company was founded in 1987 by Ramalinga Raju. The company is based in Hyderabad, India and was the fourth largest software exporter in India until January 2009. As one of the largest software company, Satyam traded in the Bombay Stock Exchange, the national Stock Exchange and New York Exchange. Satyam grew rapidly with customers stretching over 66 countries and was ranked at 185th on the Fortune 500 companies list. In 2008, Satyam received the the Global Peacock Award for global excellence in corporate accountability. Satyam continued to grow even when stock markets around the world were collapsing. In December 2008, Mr. Raju wanted to merge Matyas a real-estate company with Satyam. Matyas a company owned by his family was a complete diversity from the software company. Raju and his family owned a lot more shares in Matyas than they did in Satyam. The merge caused investors to question Mr. Raju’s intentions. The stockholders objected to the merge and the idea was aborted. However, the damage had already been done. The investors had lost faith and Satyam’s stocks plunged to an unbelievable low. Ironically, the word Satyam means Truth in Sanskrit and as the world watched the truth about Raju started to unravel. Fraud is Uncovered In October of 2008, World Bank fired Satyam and restrictions were put in place against the company from bidding for eight years. World Bank alleged that that Satyam had placed spy...
Words: 4845 - Pages: 20
