Professional Documents
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OBJECTIVES
Corporate governance is the new buzzword in corporate and academic circles today. It means several things to several people, depending on the sensitivity of the analyst and his vested interest in it. This chapter gives an overview of the concept, defines it, discusses its evolution and explains its relevance and impact on the economy.
CHAPTER OUTLINE
Capitalism at Crossroads
Increasing Awareness Global Concerns What Is Corporate Governance? Governance Is More Than Just Board Processes
Giant corporations such as Enron Worldcom, Dynegy, Waste Management, Adelphia Communications, Tyco, Imclone Systems and Rite Aid failed and were being investigated for fraud and malpractices.
Many of their top executives were penalised for committing fraud and irregularities.
Indian corporations were insulated. A closed economy, a sheltered market, limited need and access to global business/trade, lack of competition, lack of adequate regulatory framework were all the causes. Besides, promoter families ruled the roost. As a result, there were a series of scams.
Increasing Awareness Global Concerns What is Corporate Governance?
Distinguishing the Roles of the Board and the Management Composition of the Board and Related Issues Separation of the Roles of the CEO and the Chairperson Should the Board Have Committees Appointments to the Board and Directors Re-election Directors and Executives Remuneration Disclosure and Audit Protection of Shareholder Rights and Their Expectations Dialogue with Institutional Shareholders Should Investors have a say in making a Company Socially Responsible Corporate Citizen
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Enabling a corporation perform efficiently by preventing fraud and malpractices Providing protection to shareholders interest Creates additional shareholder value over time Enhancing the valuation of an enterprise Ensuring compliance of laws and regulations