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Corporate Governance – Precepts and Practices Corporate Governance is a new buzzword, both in business and academic circles. It is typically perceived in academic literature as dealing with “problems that result from the separation of ownership and control.” From this perspective, Corporate Governance should focus on an internal structure and the role of the Board of Directors; the creation of independent audit committees; rules for disclosure of information to shareholders and creditors and control of management. Corporate governance systems depend on a set of institutions and systems with laws, regulations, contracts, norms that create self governing firms as a central element of the competitive economy. These institutions ensure that the internal Corporate Governance procedures adopted by firms are enforced and that management is responsible to the shareholders and other stakeholders. As John D Sullivan, one of the earliest writers on the subject asserted, “In developing economies one must look to supporting institutions as for example, shoring up week judicial and legal systems in order to enforce contracts and protect property rights in a better way.” Though all stakeholders realized the importance and significance of Corporate Governance to ensure long term shareholder value, especially after America’s Hall of Shame of 2002, which was littered with the collapse mega corporations such as WorldCom, Enron, Dynegy, Waste Management and Adelphia Communications, there is certain amount of haziness in understanding, appreciating and ensuring Corporate Governance. There are a several problems and issues that confront India Inc. to put in place an effective Corporate Governance system. Of these, the most important are, Constitution of an effective Board of Directors (including induction of Independent Directors), Role of Auditors in ensuring Corporate Accountability, Challenges faced by the market regulators to ensure better governance and many more. For instance there are many provisions in statute book to penalize those who violate the norms of Corporate Governance but are hardly acted upon, either because of lack of will or due to political interference India has witnessed with an unfailing regularity corporate scams in which millions of investors have lost their money. There are instances of vanishing companies promoted by fly by night operators who have duped unwary investors of their hard earned money yet market regulators have hardly penalized them either because they don’t have the manpower or resources to investigate and go to courts of law. Though this subject is very much in the air, few people seem to understand the nuances of it. The objective of the session “Corporate Governance – Precepts and Practices” therefore, is to throw light on various facets of Corporate Governance confronting India Inc., especially with respect to the above cited issues. By inviting experts in these fields, we hope to give conceptual clarity and practical insights to the participants in the conference.
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