Corporate governance (CG) is one of the most talked about topics in business,indeed in society, today. Most academics, business professionals, and lay observerswould agree that CG is defined as the general set of customs, regulations,habits,and laws that determine to what end a firm should be run. Much more fraught,however, is the question: “what defines
It is clear that CG exists at a complex intersection of law, morality, and economicefficiency. Less clear,however, is the extent to which current MBA education reflects that complexity. CGis usually not adistinct academic discipline, but integrated into other courses. Considering thatissues of executivecompensation, financial scandals, and shareholder activism are all tied up with CG,its teaching is a topicworth investigation.Companies pool capital from a large investor base both in the domestic and in theinternational capital markets. In this context, investment is ultimately an act of faithin the ability of a company’s management. In order to manage the affairs of acompany and to act in the best interests of all at all times, there must be a systemwhereby the directors are entrusted with responsibilities and duties in relation tothe direction of the company affairs. Corporate governance is a system of makingManagement accountable towards the stakeholders for effective managementof the companies.
Factors behind the Origin of Corporate Governance
In the era of globalization, foreign investors have become very careful aboutinvesting their money.
Kumar Mangalam Birla Committee Report appointed by SEBI has formulatedsome guidelines.
Increasing active rate of investigative reporting in business journalism.
Mergers and acquisitions taking place at a fast pace.
Principles of corporate governance revolve around three basic interrelatedsegments. These are:
Integrity and Fairness
Transparency and Disclosures
Accountability and ResponsibilityIn other words, 'good corporate governance' is simply 'good business'.