Evolution of Corporate Governance in India and Abroad

Introduction

Corporate governance issues have attracted considerable attention, debate and research world
wide in recent decades. Almost invariably, such efforts gain momentum in the wake of some
major financial scam or corporate failure, as these tend to highlight the need for tighter
surveillance over corporate behavior. Corporate governance has wide ramifications and extends
beyond good corporate performance and financial propriety though these are no doubt essential.
In India also, corporate governance has been under scrutiny and is an issue that has gained
widespread importance.

No one can agree exactly how corporate governance should be incorporated in a company’s
strategy. Different people have different definitions of corporate governance. The dictionary
meaning of governance includes both ‘the action or manner of governing’ and ‘a mode of living,
behavior, and demeanor’. Corporate governance is essentially

Is this Essay helpful? Join OPPapers to read more and access more than 325,000 just like it!

get better grades
concerned with the process by which companies are governed and managed. It is a set of
standards, which aims to improve the company’s image, efficiency, effectiveness and social
responsibility. The concept of corporate governance primarily hinges on complete transparency,
integrity and accountability of the management, with an increasingly greater focus on investor
protection and public interest. A key element of good governance is transparency projection
through a code of good which incorporates a system of checks and balances between key players
– board, management, auditors and shareholders.

In the debate concerning the impact of corporate governance on performance, there are basically
two different models of the corporation, the shareholder model and the stakeholder model. In its
narrowest sense (shareholder model), corporate governance describe the formal system of
accountability of senior management to shareholders. According to the model the objective of
the firm is to maximize...

Does Corporate Governance Enhance Firm Performance?

DOES CORPORATE GOVERNANCE ENHANCE FIRM PERFORMANCE?

BY: DR. RONALD IWU-EGWUONWU

Introduction:

Nations thrive on the performance of their economic units the major part of which are business
firms that operate in their corporate jurisdictions. The quality of performance of these firms is of
great interest to governments because by them a great amount of the degree of economic
development seen in a country is achieved. Governments fund their annual budgets to a great
extend by the amount of proceeds that come from internally generated revenues a good part of
which come from firms and corporations in the form of tax and other forms of direct and indirect
support. These firms also support quite a lot of developmental projects in the country in line with
their social responsibility goals. They are able to do these things when they do well themselves.
But to do well firms must by themselves be governed well. The notional view therefore is that
the quality of performance of

Is this Essay helpful? Join OPPapers to read more and access more than 325,000 just like it!

get better grades
firms very much depends on the quality of their corporate governance. It is believed that without
good governance no firm can do well and when firms don’t do well their contribution to the
economic development of the nation would be zero.

Notwithstanding that good governance has been a long time issue in public and corporate
governance, today there is a very strong interest in corporate governance, and this interest is
driven by the frequency of high profile corporate scandals beginning with those of Enron,
WorldCom, Royal Trust, Parmallat, and so on. In Nigeria’s banking industry alone, about 54
banks failed between 1994 and 2005. This figure is quite scandalous and disturbing and has thus
helped to heighten over all interest in the improvement of the quality of corporate governance.
The role of the board as their firms collapse or get into scandals “overnight” has also been quite
disturbing. Just like it takes many years to become rich overnight, it also takes quite a long time
of...

Corporate Governance

[edit] Definition
In A Board Culture of Corporate Governance business author Gabrielle O'Donovan defines
corporate governance as 'an internal system encompassing policies, processes and people, which
serves the needs of shareholders and other stakeholders, by directing and controlling
management activities with good business savvy, objectivity and integrity. Sound corporate
governance is reliant on external marketplace commitment and legislation, plus a healthy board
culture which safeguards policies and processes'.
O'Donovan goes on to say that 'the perceived quality of a company's corporate governance can
influence its share price as well as the cost of raising capital. Quality is determined by the
financial markets, legislation and other external market forces plus the international
organisational environment; how policies and processes are implemented and how people are
led. External forces are, to a large extent, outside the circle of control of any board. The internal
environment

Is this Essay helpful? Join OPPapers to read more and access more than 325,000 just like it!

get better grades
is quite a different matter, and offers companies the opportunity to differentiate from competitors
through their board culture. To date, too much of corporate governance debate has centred on
legislative policy, to deter fraudulent activities and transparency policy which misleads
executives to treat the symptoms and not the cause.'[2]
It is a system of structuring, operating and controlling a company with a view to achieve long
term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and
complying with the legal and regulatory requirements, apart from meeting environmental and
local community needs.
Report of SEBI committee (India) on Corporate Governance defines corporate governance as the
acceptance by management of the inalienable rights of shareholders as the true owners of the
corporation and of their own role as trustees on behalf of the shareholders. It is about
commitment to values, about ethical business conduct and about making a...