Corporate Governance and Social Responsibility

- Prof. Vikram Tyagi

Corporate Governance and Social Responsibility Course Objectives:

The objective of this course is to sensitize the students to the key issues in Corporate Governance and associated patterns of Corporate Behavior; Help understand India and international scenario of Corporate Governance, and to help formulate reasoned views on the need for appropriate controls with regard to Corporate Governance. To become socially responsible and knowledgeable professional business mangers.

Corporate Governance and Social Responsibility

Pedagogy

Method of Evaluation
Class participation Quizzes 4x5 marks Group Assignment Final Examination -10 -20 -20 -50

PPT, Case Studies; class discussions; project work

marks marks marks Marks

Prof. Vikram S Tyagi, APSM

Group Assignment- 20 marks

Make groups of 3-4 students of your choice Choose a company Class coordinators to hand over list by next class:
Sec-B:1. Sahil -9999816653
Sec-C: 1. Monika-8826412769 2. Jaideep 9717104592 2. Sarneeet kaur-9999679585

The assignment : Corporate Governance and Social Responsibility practices in the .(company of your choice) Please Email written assignment to: vikram.tyagi@gmail.com Mob: 9811809057
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Corporate Governance and Social Responsibility

Course out line/Session Plan
file);
( Refer to word

Suggested Readings:
1-Fernando, Corporate Governance, Pearson Education, 2012 2-Boatwright, Ethics and the conduct of business, Pearson Education, 4th edition 3-Reed Darryl, Corporate Governance economic reforms and development, Oxford, 2004 4-Velasquez, Business Ethics concepts and cases, PHI, 2006 5-Kistson Alan, Ethical Organization, Palgrave, 2006 6-Chakraborty, S.K, Ethics in Management, Oxford University Press, 2005

Over View of the Course

Understanding what is Corporate Governance? Agents and Institutions in Corporate Governance Fascinators, Role Players and Regulators Issues and problems of Corporate Governance in Emerging Economies
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Understanding Corporate Governance

Corporate Governance: An Overview (This Session) The Theory and Practice of Corporate Governance (Next Session) Landmarks in the Emergence of Corporate Governance (Next to next Session)

Top 10 business scams in India

1. 2G scam: None can beat this one, the infamous 2G scam, a
fiddle of 1.76-lakh crore in the telecom industry of India. According to the CAG report, the former Telecom minister, A Raja evaded norms at every level as he distributed the dubious 2G license awards in 2008 at a throw-away price which were pegged at 2001 prices. Comptroller and Auditor General (CAG) report indicted that out of Rs 7000 crore intended to be spent on the Games, only half the amount was spent on Indian Sportspersons. Not only did the scam put Suresh Kalmadi, the sacked CWG Chairperson behind bars, but the recent report has also indicted Sheila Dikshit, Chief Minister, New One of the most dramatic scams in India, Abdul Karim Telgi was the mastermind behind the whole idea of printing forged duplicate stamp papers that made its way into the banks and other institutions. Estimated at a massive cost of Rs 20,000 crore, the fake stamp paper and stamp had infiltrated 12 states.

2. Commonwealth Games Scam (CWG):The

3. Telgi Scam:

Business scams in India

4. Satyam Scam:
The 7,000 crore by Satyam Computer Services scam is one of the biggest scams that the corporate world would ever want to forget. Ramlinga Raju, ex-chairman of the company was held on the charges of falsifying the accounts of the company for years together gain profit. The Bofors scam was a major corruption scandal in India in the 1980s and grough a major setback Gandhi's ruling Indian National Congress party. The then PM Rajiv Gandhi and several others including a powerful NRI family named the Hindujas, were accused of receiving kickbacks from Bofors AB for winning a bid to supply India's 155 mm field howitzer. It has been speculated that the scale of the scandal was to the tune of USD 400 million.(Rs 2400 crores) The famous 1996 fodder scam also famously known as the Chara Ghotala scam involved a whopping amount of Rs 950 crore. The fabricated case involved taking reimbursement from the state's treasury that included animal husbandry equipment, medicine and fodder for 'vast herds of fictitious livestock.'
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5. Bofors Scam:

6. The Fodder Scam:

Business scams in India

7. The Hawala Scandal:
The $18 million (Rs 100 Crores)scam came to light after the country's top political leaders were involved in receiving payments through hawala brokers. The Jain brothers were the main accused in the whole scandals who were apprehended by the police in 1995. From the list of those accused also included Lal Krishna Advani who was then the Leader of Opposition.
It was

9. Harshad Mehta & Ketan Parekh Stock Market :

basically a fraud done in the capital market with the investors by manipulating the facts in order to attain enormous profits There is no way that the investor community could forget the unfortunate 4000 crore Harshad Mehta scam and over 1000 crore Ketan Parekh scam which eroded the shareholders wealth in form of big market.. He triggered a rise in the Bombay stock exchange in the year 1992 by trading in shares at a premium aross many segments.

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Business scams in India

10. Citibank Fraud:
Citibank fraud was a major blow to Indian financial service industry (Rs 500 Crores). The real culprit behind this scene is Mr. Shivraj Puri, who was working as the relationships manger with Gurgaon branch of Citibank. He lured investors into a fake scheme with the help of forged circulars from Securities and Exchange Board of India (SEBI) with a hope to cash on very high interest rates. He came into light when the bank started receiving complaints.

Many other Scams:

Disappearance of 3,911 companies- in1993-94 Companies that raised over Rs. 25,000 crore vanished or did not set up their projects. Plantation companies scam - 1995-96. saw Rs. 50,000 crore mopped up from gullible investors who believed plantation schemes would jield huge returns Non-banking finance companies scam in 1995-97 also saw more than Rs. 50,000 crore mopped up from the public promising them high returns but vanished. The mutual fund scam between 1995-98 saw public sector banks raising nearly Rs. 15,000 crore by promising huge fixed returns, but all of them flopped.
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Global Corporate Frauds

USA
Enron Energy firm
-created outside partnerships that helped hide its poor financial condition and finally had to file for bankruptcy. Enron's $63.4 billion in assets made it the largest corporate bankruptcy in U.S. history until WorldCom's bankruptcy the next year.

WorldCom- improperly booked $3.8 billion in expenses, thus inflating profits Bernie Ebbers - the founder,, borrowed $408 million from the phone company to cover
personal debts.

Arthur Andersen accounting firm,, was accused of shredding Enron documents Waste Management for massive accounting fraud from 1992 to 1997 that resulted in a
$17 billion restatement of earnings , L. Dennis Kozlowiski, was charged with deliberately dodging sales tax on purchase of artwork for his New York residence.

Tyco Chief Executive Imclone Systems

was charged with insider trading after company's drug application

got rejected.

years.

Peregrine Systems

said it might have overstated revenue by $100 million over three

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Capitalism at Crossroads
A grave crisis of credibility in the very foundation of capitalism i.e. the Corporate during the

very early years of the new millennium Investors, on their part, can neither equate high profits shown by their companies as a sure index of corporate efficiency or failure to get good return as a bad governance The problems of corporate America and more so of developing economies such as India, have a lot to do with the failure of the auditing profession to safeguard consciously the interests of shareholders. There is a growing apprehension, that all is not well with the profession of auditing. The reported corporate lootings have become so frequent, so spectacular that the term "business ethics" is starting to sound like a cruel oxymoron. CEO, the corporate hero in prosperous times, is now vilified as a crook, gambling away the retirement savings of hapless workers and other unwary investors.
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Reasons for Corporate Misgovernance

Greed

- by share holders, executives and other stake holders

quicker and higher profits.

Lack of strong social and moral standards Lack of adequate regulations Inefficient regulators Inefficient implementation of existing laws and regulations Increased opportunities have resulted in greater number and bigger size of scam

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Illegal Tactics and practices of Indian Corporate

Cornering of industrial licenses
make a quick profit; and now grabbing land for future profits
mainly with a view to preempting competitors to enter into their well-entrenched industry- Coal, Telecom, Mining ores.

Grabbing profitable opportunities Illegally holding money abroad

investments for which government would not allow enough funds.

-import licenses to

to meet business expenses and

Bribery to concerned officials having many objectives Misreporting income and expenses -Cash transaction not
recorded

Fringe benefits to executives for favors

home loans

- Holidays,

Dummy companies and bank accounts -Nitin Gadkari Political Patronage for . money- Big business would usually es15
need that

Increasing Awareness
Many conclaves and conferences to work out code of conduct.
Department of Company Affairs Institute of Company Secretaries, Federation of Indian Chambers of Commerce and Industry (FICCI), Confederation of Indian Industry (CII), Securities and Exchange Board of India (SEBI) Association of Mutual Funds in India (AMFI) . 1987- voluntary acceptance of code of conduct framed by Confederation of Indian Industry (CII) beginning of he corporate governance movement in India. 1999, the Securities and Exchange Board of India (SEBI)India's capital market regulator set up a committee headed by Kumar Mangalam 1 April 2001, over 140 listed companies accounting for almost 80 per cent of market capitalization started following a mandatory code which was in line with some of the best international practices. By April 2003, each and every listed company joined the SEBI code.
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Global Concerns

A series of events over the last two decades have placed corporate governance issues as of paramount importance both for the international business community and international financial institutions.
Serious frauds in the USA as listed earlier. The virtual collapse of the Russian economy in 1998- $ 100 bill moved out illegally. Asian financial crisis also demonstrated that even strong economies lacking transparent control, responsible corporate boards and share holder rights can collapse quickly as investors' confidence erodes

International and national business communities are gradually realizing the fact that there is no substitute for getting the basic business management systems and controls in place in order to be competitive in the global market and to attract foreign investment.
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What is Corporate Governance?

Definitions of Corporate Governance- many definitions depending on perspective From the Academic Point of View
result from the separation of ownership and control Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment

Corporate governance is seen as one that addresses "the problems that

This point of view tend to focus on a simple model:

1-Shareholders elect directors who represent them. 2-Directors vote on key matters and adopt the majority decision. 3-Decisions are made in a transparent manner so that shareholders and others can hold directors accountable. 4-The company adopts accounting standards to generate the information necessary for directors, investors and other stakeholders to make decisions. 5-The company's policies and practices adhere to applicable national, state and local laws. . 18

What is Corporate Governance?

From the Angle of Developed Versus Developing

Countries

Corporate governance means doing everything better to improve relations between companies and their shareholders; to improve the quality of outside directors; to encourage people to think of long term relations; information needs of all stakeholders are met and to ensure that executive management is monitored properly in the interest of shareholders. Sir Adrian Cadbury, chairman of the Cadbury Committee, defined the concept thus: "Corporate governance is defined as holding the

balance between economic and social goals and also between individual and communal goals
Economic Co-operation and Development (OECD) have defined corporate governance as "the system by which business corporations are directed and controlled". According to them, "the corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation such as, the Board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs
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What is Corporate Governance?

Narrow Versus Broad Perceptions of Corporate Governance
Corporate governance can also be defined from a very narrow perception to a broad manner. According to an article that appeared in Financial Times in 1997:

"Corporate governance... is defined narrowly as the relationship of a company to its shareholders or, more broadly, as its relationship to society." All points view agree that corporate governance is about managing corporations in a better and fair way
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Corporate Governance requirements

(OECD 2000 guidelines)

1-Rights of shareholders: include secure ownership of their shares, voting

rights, the right to full disclosure of information, participation in decisions on sale or any change in corporate assets mergers) and new share issues. Shareholders have the right to know the capital structures of their corporation and arrangements that enable certain shareholders to obtain control disproportionate to their holding. All transactions should be at transparent prices and under fair conditions. Anti-takeover devices should not be used to shield management from accountability

2-Equitable treatment of shareholders: that all shareholders

including minority and foreign shareholders should get equitable treatment. Directors should disclose any material interests regarding transactions. They should avoid situations involving conflict of interest while making Decisions. Interested directors should not participate in deliberations leading to decisions that concern them.

3-Role of other stakeholders in corporate governance:

Allow employee representation on board of directors, profit sharing, creditors' involvement in insolvency proceedings etc. For an active stakeholder participation, it should be ensured that they have access to relevant information. The company objective, financial details, operating results, governance structure and policies, the Board of Directors, their remuneration, significant foreseeable risk factors and material issues regarding employees and other stakeholders. The annual audits should be performed by independent auditors in accordance with high quality standards like the OECD. 21 .

4-Disclosure and transparency:

Corporate Governance requirements

(OECD 2000 guidelines)

5-Responsibilities and Functions of the board:

These functions would include concerns about corporate strategy, risk, executive compensation and performance, accounting and reporting systems, monitoring effectiveness and changing them, if needed.

The OECD guidelines focus only on those governance issues which arise due to separation between ownership and control of capital. Though these have limited focus, they are comprehensive, especially with reference to voting rights of institutional shareholders and obligations of the Board to stakeholders. APEC principles too reiterate them, they give foremost importance to disclosures. Again, instead of rights of shareholders, they reiterate the rights and also of the responsibilities of shareholders, managers and directors

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X-The Growth of Modern Ideas of Corporate Governance

USA:

1-The seeds of modern ideas of corporate governance were probably sown by the Watergate scandal during the Nixon presidency in the US in 1972 2-Foreign and Corrupt Practices Act of 1977 in America that provides for the maintenance and review of systems of internal control in an establishment. In the same year, the Securities and Exchange Commission (SEC) proposed mandatory reporting on internal financial controls. 3-In 1985, a series of high profile business failures rocked the US which included the collapse of Savings and Loan. With a view to identifying the main causes of misrepresentation in financial reports and to recommend ways of reducing such incidences, the government appointed the Treadway Commission. Treadway Commission published in 1987 highlighted the need for a proper control environment, independent audit committees and an objective Internal Audit System.. As a result of this recommendation, the Committee of Sponsoring Organizations (COSO) came into being in 1992 stipulated a control framework for the orderly functioning of corporations.
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X-The Growth of Modern Ideas of Corporate Governance

UK

1-The Cadbury Committee: under the chairmanship of Sir Adrian Cadbury was appointed by the London Stock Exchange in 1991. This Cadbury Committee, was assigned the task of drafting a code of practices to assist corporations in England in defining and applying internal controls to limit their exposure to financial loss, from whatever cause it arose. Though the recommendations of the committee were not mandatory in character, the companies listed on the London Stock Exchange were enjoined to state explicitly in their accounts, whether or not the code has been followed by them, and if not complied with, were advised to explain the reasons for noncompliance. The Cadbury Code of Best Practices issued in 1992 had recommendations which were in the nature of guidelines relating to the board of directors, non-executive directors and those on reporting and control.
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X-..The Growth of Modern Ideas of Corporate Governance-UK

2-The Code of Best Practices, shocked the corporate world in Britain and elsewhere. The most controversial of the Cadbury's recommendations was the one that required that the "directors should report on the effectiveness of a company's system of internal control". It was the extension of control beyond the financial matters that caused the controversy. After five years of the Cadbury Report, public confidence in corporates in England was again shaken by further scandals. 3-To deal with the situation, a "Committee on Corporate Governance" headed by Ron Hampel was constituted with a brief to keep up the momentum by assessing the impact of Cadbury Report and developing further guidelines. The final report of the Hampel Committee submitted in 1998 contained some important and progressive guidelines, especially the extension of directors' responsibilities to "all relevant control objectives including business risk assessment and minimizing the risk of fraud". 4-Earlier, another Committee headed by Greenbury to address the issue of directors' remuneration submitted its Report in 1995. An amalgam of all these codes known as the Combined Code was subsequently derived. This Combined Code is appended to the listing rules of the London Stock Exchange and its compliance is mandatory for all listed companies in the United Kingdom. . 25

X-..The Growth of Modern Ideas of Corporate Governance-UK

5-The developments with regard to corporate governance led to the publication of Turnbull Guidance in September 1999, which required the board of directors to confirm that there was an ongoing process for identifying, evaluating and managing key business risks. Shareholders, after all, are entitled to ask if all the significant risks had been reviewed and why was a wealth-destroying event not anticipated and acted upon? It was also found that the one common factor behind past failures of corporates was the lack of effective Risk Management. Risk Management subsequently grew in importance and is now seen as highly crucial to the achievement of business objectives by corporates.

It was clear, therefore, that boards of directors are not only responsible not just for reviewing the effectiveness of internal controls but also for providing assurance that all the significant risks have been reviewed. Furthermore, assurance was also required that the risks had been managed and an embedded risk management process was in place. In many companies, this challenge was being passed on to the Internal Audit function.
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Corporate Governance in Banking sector

Weakness in the banking system of a country can threaten the financial stability, both within the country and globally.
The need to improve the strength of financial systems has attracted growing international concern. A communication issued at the close of the Lyon G-7 Summit in June 1996 called for action in this vital area. Several official bodies including the Basel Committee on Banking Supervision established by the Central Bank Governors of the Group of Ten Countries in 1975, the Bank for International Settlements, the International Monetary Fund and the World Bank have recently been examining ways and means to strengthen financial stability throughout the world. The Basel Committee on Banking Supervision has been working in this field for many years, both directly and through its many contacts with banking supervisors in every part of the world.
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Global comparison of Guidelines

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Revival of Corporate Governance Issues in the New Millennium

Between the period 2000 and 2002, the revelations of corporate fraud in the US were of such magnitude and inflicted such damage on investors' that company reputations were irreparably destroyed and investors confidence dipped to a new low. Declining stock prices and erosion of billions of dollars of investors had severe and widespread impacts. The fraud and self-dealing revelations resulted in investigations by the Congress, the Securities and Exchange Commission (SEC), and the State Attorney General in New York. All these enquiries and the conclusions put their teeth in a

The Sarbanes-Oxley Act (SOA) was enacted into law on 30 July 2002 proving sweeping recommendations
comprehensive Act.
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Issues in Corporate Governance

1. Distinguishing the roles of board and management: As per this arrangement, the board of a listed
company has the following functions:

Select, decide the remuneration and evaluate on a regular basis, and when necessary, change the CEO. Oversee (not directly, but indirectly) the conduct of the company's business to evaluate whether or not it is being correctly managed. Review and, where necessary, approve the company's financial objectives and major corporate plans and objectives. Render advice and counsel to top management. Identify and recommend candidates to shareholders for electing them to the board of directors. Review the adequacy of systems to comply with all applicable laws and regulations. All other functions required by law to be performed.
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Issues in Corporate Governance

2. Composition of the board and

related issues:

The composition of board of directors refers to the number of directors of different kinds that participate in the work of the board. Over a period of time there has been a change as to the number and proportion of different types of directors in the board of a limited company. The figure in next slide illustrates the usual composition of the board in recent times in most of the countries.

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Composition of the board of Directors

32 .

Issues in Corporate Governance

3.Separation of the roles of the CEO and chairperson:
It is now increasingly being realized that the practice of combining the role of the chairperson with that of the CEO as is done in countries like the US and India leads to conflicts in decision-making and too much concentration of power in one person resulting in unsavory consequences.

In the United Kingdom and Australia, the CEO is prohibited from being the chairperson of the company. The

role of the CEO is to lead the senior management team in managing the enterprise, while the role of the chairperson is to lead the board, one important responsibility of the Board being to evaluate the performance of senior executives including the CEO. Combining the role of both the CEO and chairperson removes an important check on senior management's activities

Chairman of the board should be an independent director

in order to "provide the appropriate counterbalance and check to the power of the CEO" as per a few authorities.
.

33

Issues in Corporate Governance

4. Should the board have committees:
Many committees on corporate governance have recommended in one voice the appointment of special committees for (i) nomination, (ii) remuneration and for (iii) auditing. These committees would lessen the burden of the Board and enhance effectiveness

5. Appointments to the board and directors re-election: As per the Indian Company Law, shareholders elect directors to
the board. Therefore, in actual practice, in most cases, the board or its specially constituted committee selects and appoints the prospective director and get the person formally "elected" by the shareholders at the ensuing Annual General Body Meeting. Shareholders in fact only endorse the boards

6. Directors' and executives' remuneration:

This is one of the mixed and vexed issues of corporate governance that came to the center stage during the massive corporate failures in the US between 2000 and 2002. Executive compensation has also in recent time become the most visible and politically sensitive issue relating to corporate governance. Related key issues are: (i) transparency; (ii) pay for performance (whether the payment is justified); (iii) process for determination; (iv) severance payments; and (v) pensions for non-executive directors. . 34

Issues in Corporate Governance

7. Disclosure and audit:
OECD guidelines and Cadbury Report have that the board of directors has a bounden responsibility to present the shareholders a lucid and balanced assessment of the company's financial position through audited financial statements. There are several issues and questions relating to auditing which have an impact on corporate governance. For instance, questions such as :
(1) Should boards establish an audit committee? (ii) If yes, how should it be composed? (iii) How to ensure the independence of the auditor? (iv) What precautions are to be taken or what are the positions of the state and regulators with regard to provision of non-audit services rendered by auditors? (v) Should individual directors have access to independent resource? and (vi) Should boards formalize performance standards?

These questions are being answered with different perceptions and with different degrees of emphasis by various committees and organizations that have gone into and analyzed these issues in depth.
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Issues in Corporate Governance

8. Protection of shareholder rights and their expectations: This is an important governance issue
which has considerable impact on the rights and expectations of shareholders. Corporate practices and policies vary from country to country. There are a number of questions relating to this issue such as:

(i) Should companies always adhere to one-share-one-vote principle? (ii) Should companies retain voting by a show of hands or by poll? (iii) Can shareholder's resolutions be "bundled"? i.e. to place together before shareholders for approval a resolution that contains more than one discrete issue and (iv) Should shareholder approval be required for all major transactions?

These questions have elicited answers with different emphasis from various committees and organizations that have addressed these issues
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Issues in Corporate Governance

9. Dialogue with institutional shareholders:

The Cadbury Committee recommends that:

institutional investors should maintain regular and systematic contact with companies In general meetings of shareholders, use their voting rights positively, take a positive interest in the composition of the board of directors of companies in which they invest. Recognize their rights and responsibilities as "owners" who should act in the best interests of those whose money they have invested by influencing the standards of corporate governance and by bringing about changes in companies when necessary, rather than by selling their shares, and quitting the companies. If institutional investors have to exercise their rights and carry out their responsibilities, companies have to provide them the required information and facilities.
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Issues in Corporate Governance

10.Should Institutional investors have a say in making a company "socially responsible corporate citizen"? This is an issue that highlights a conflict between two schools of thought:
One school based on past experiences contends that institutional investors should act in the best financial interests of the beneficiaries. This is based on the assumption that socially responsible behavior of corporations such as ecological preservation, anti-pollution measures and producing quality and environment-friendly products which always enhance costs and thus reduce profits. Second school of thought which asserts environment friendliness and economic gains are not contradicting goals, but on the other hand, they benefit corporations in the long run and cite the examples of Ford Motors, Johnson & Johnson, Pfizer and Dow Chemicals to prove their point.
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Issues in Corporate Governance

On both sides and though the last word is yet to be said on the issue, present thinking worldwide across continents and divergent societies prefer strong, corporate that are committed to the overall welfare of people in whose midst they work and make their gains.

(c) Dr. Azhar Kazmi 2008

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Benefits of Good Corporate Governance

1-Benefits to society:

Many benefits are as follows: A strong and vibrant system of corporate governance can be a major benefit to society even in developing countries where shares of most firms are not actively traded on stock markets Stronger corporate governance protections for minority shareholders have much larger and more liquid capital markets For countries that try to attract investors corporate governance matters a great deal in getting the hard currency out of potential investors. Corporate governance is also inter-related to another area Corruption: When companies try to be transparent, have systems that provide full disclosure of accounting and auditing procedures, allow transparency in all business transactions, corruption will not have a big role to play. Better corporate governance procedures can also improve the management of the firm and help a great deal in working out business strategy, ensuring that mergers and acquisitions are undertaken for sound business reasons and that compensation system reflect performance. It needs to be stressed that good corporate governance system also has 40 to include improvements in management system.
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Benefits of Good Corporate Governance

2-Benefits of Good Corporate Governance to a Corporations:
1- Creation and enhancement of a corporation's competitive advantage: Creating competitive advantage requires both the vision to

innovate and the strategy to manage the process of delivering value. An effective board should be one that is able to craft strategies that fit the business environment of the corporation and are flexible to accommodate opportunities and threats, and to compete for the future, hence improve competitive edge in the market place

2-Enabling a corporation perform efficiently by preventing fraud and malpractices: The Code of Best Conductpolicies and procedures

governing the behavior of individuals of a corporationform part of corporate governance. This enables a corporation to compete more efficiently in the business environment and prevents fraud and malpractices that destroy business from inside

3.Providing protection to shareholders' interest:

Corporate governance is a set of rules that focuses on transparency of information and management accountability. It imposes fiduciary duty on management to act in the best interests of all shareholders and properly disclose operations of the corporation. . 41

Benefits of Good Corporate Governance to a Corporations

4. Enhancing the valuation of an enterprise:
Improved management accountability and operational transparency fulfill investors' expectations and confidence on management and corporations, and in return, increase the value of corporations. As indicated earlier, companies that have adopted corporate governance standards have invariably enhanced market their valuations.

5.Ensuring compliance of laws and regulations: With the development of capital markets and the

increasing investment by institutional shareholders and individuals in corporations that are not controlled by particular shareholders, jurisdictions around the world have been developing comprehensive regulatory frameworks to protect investors. More rules and regulations addressing corporate governance and compliance have been and will be released. Ensuring compliance of law and regulations becomes very essential.

Long-term sustainability and survival of a corporation and thereby enables its shareholders long-term
benefits.
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Corporate Governance

Next Session:
1-The Theory and Practice of Corporate Governance 2- Landmarks in the Emergence of Corporate Governance

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Corporate Governance and Social Responsibility

- Prof. Vikram Tyagi

44