As a matter of fact, corporate governance is there in India since 4th century B.C (Muniapan, 2007). Kautilya’s arthashastra highlights the corporate governance made in ancient India which can be incorporated to the present day management. The main aim of the corporate governance is to provide value to the company’s shareholders. Kings were replaced by corporate in modern business but the principles of the governance remain same.
Need for Corporate Governance: The increasing concern on the financial disclosures made by several companies laid the need for corporate governance. Organizations were not following proper standards of reporting their financials which is causing heavy losses for the stakeholders. Some of the international companies like world com of US, Xerox of Japan have collapsed due to lack of good corporate governance and unprincipled practices embraced by the management. These implications made the separation of power between the board of directors of a company and the management where the board of directors is free to make policies that is necessary for good governance.
Securities and Exchange board of India (SEBI) had clearly understood the importance of cor...
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...vities, he will be prosecuted as per the company’s legislature norms.
CSR: Corporate companies should also focus on social responsibility along with their regular business. India companies’ act of 2013 had made CSR mandate for the companies that they should spend 2% on social service. These kinds of initiatives and implementations were possible by having effective corporate governance. Corporate governance also plays a key role in the mergers and acquisitions of different companies (Akrani, 2011).
Conclusion: Indian economy is changing radically since liberalization and globalization. The world is looking at India as a good center for their investment and hence adopting good corporate governance policies is essential for the companies to ensure good returns. Furthermore, good corporate governance allows the companies and economy to grow even more in the coming years.
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