Importance Of Corporate Governance

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With the recent wave of corporate scandals and the subsequent interest in corporate governance, a excess of norms and standards have arisen up around the globe. Corporate governance goes beyond corporate law as objective is to ensure commitment on managing transparency for maximising shareholder values along with fulfillment of legal requirements. As competition rises, technology pronounces the system of Corporate Governance also need to upgrade itself with the changing needs and demands of evolving economic society. Since the late 1990s, significant efforts have been made by the Indian Parliament, as well as by Indian corporations, to renovate Indian Corporate Governance. The present regime in Indian provides for both voluntary and mandatory…show more content…
It has been. Good corporate governance has many benefits of itself. It additionally lowers the cost of capital by reducing risk and creates higher firm estimation once again boosting real investments. It has the potential of significantly dipping the risk of nation-wide financial crises. There is a strong inverse relationship between the quality of corporate governance and currency depreciation. Poor transparency and corporate governance norms are believed to be the key reasons behind the Asian Crisis of 1997. Such financial crises have massive economic and social costs and can set a country several years back in its path to…show more content…
• Improved transparency Remuneration of CEOs should be decided by a regulatory body like SEBI based on size of the company or decided by institutional investors holding significant stake in the company. • Remove One-Size-fits-all approach Clause 49, which lays down role of the audit committee and role of board disclosure risk management, mentions compliance norms to be independent of the size of the company. This may not necessary yield the desired levels of compliance in India. • Better effectiveness Medium term lock-in options (medium term stock options which are convertible only after 4-5 years or simply through contracts for the number of years of stay) for the CEO to prevent the CEO from acting in ways to gain short term gains from unethical
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