Corporate governance: a study in Indian scenario and related issues

Abstract

The focus of the study was to find out how Indian companies respond to the concept of corporate governance and to detect the extent of implementation, of recommendations given by the CII draft code, desirable corporate governance and SEBI's code of corporate governance. The project intends to cover the BSE-I00 companies so as to have a balanced representation of the economy. For long it had been felt that a lot has been discussed on how and why to implement corporate governance, but no study revealed the actual condition in the industry regarding the extent of implementation of recommendations laid down by various committees. This work intends to bridge the gap between theory development in the discipline and a grass-roots survey to assess evaluation of the same. The task undertaken was accomplished with a mail-survey focusing on: (i) board composition & its functioning, (ii) working of subcommittees (audit, compensation and share transfer) and (iii) disclosure practices in the system. Out of the 33 companies who responded an analysis is being done based on sector classification, size of companies, etc. The findings suggest that foreign private companies are prominently working for implementation of corporate governance, whereas Indian private companies are found wanting. The study raised a major question regarding the role of various sub-committees also. Although some of the companies seem to comply with the formation of sub committees, the spirit behind the same has not been justifiably comprehended. The study found that the depth required for implementation of corporate governance was deficient. It appears that organizations have been focusing more on structural modifications and the philosophy underlying corporate governance has been sidelined. Organizations are worried about forming sub-committees while the purview of the same is extremely narrow, contradictory to the ideology of corporate governance. Thus this study raises further questions regarding structural vs. ideological implementation of corporate governance.