a study on the stakeholders' perception of corporate governance
Transcript of a study on the stakeholders' perception of corporate governance
A STUDY ON THE STAKEHOLDERS’
PERCEPTION OF CORPORATE GOVERNANCE
PRACTICES WITH REFERENCE TO THE
SOFTWARE COMPANIES IN INDIA
A THESIS
Submitted By
N. NATARAJAN
for the award of the degree
of
DOCTOR OF PHILOSOPHY
in
DEPARTMENT OF MANAGEMENT STUDIES
DR. M.G.R.
EDUCATIONAL AND RESEARCH INSTITUTE
UNIVERSITY
(Declared u/s 3 of the UGC Act, 1956)
CHENNAI - 600 095
JULY – 2011
ii
CERTIFICATE
I certify that the thesis entitled “A Study on the Stakeholders’
Perception of Corporate Governance Practices with reference to the Software
Companies in India”, submitted for the Doctor of Philosophy by
Mr. N. Natarajan is the record of research work carried out by him during
the year 2006 to 2011 under my guidance and supervision, and that this work
has not formed the basis for the award of any degree, diploma, associate-ship,
fellowship or other titles in this University or any other University or
Institution of Higher Learning.
Dr. K Maran,
Research Supervisor,
Director,
Sri Sai Ram Institute of Management Studies,
Sri Sai Ram Engineering College,
Chennai – 600 044
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DECLARATION
I declare that the thesis entitled, “A Study on the Stakeholders’
Perception of Corporate Governance Practices with reference to the Software
Companies in India”, submitted by me for the degree of Doctor of Philosophy
is the record of work carried out by me during the year 2006 to 2011 under the
guidance of Dr. K Maran and has not formed the basis for the award of any
degree, diploma, associate-ship, fellowship, titles in this or any other
University or other similar Institution of Higher Learning.
N NATARAJAN
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ABSTRACT
Globally, Corporate Governance is gaining momentum and in India it
has made rapid development among corporates. It has not only been the basic
tenet of companies, but also to Government and other societal institutions.
Corporate Governance is the set of processes, customs, policies, laws and
institutions affecting the way a corporation is directed, administered or
controlled. Corporate Governance also includes the relationships among the
many players involved and the goals for which the corporation is governed.
The principal players are Shareholders, Management and Board of Directors.
Other stakeholders are employees, suppliers, customers, banks and other
lenders, regulators, the environment and community at large. The collapses of
corporates such as like Enron, WorldCom, Tyco etc., were obviously the key
motivators for the heightened interest in Corporate Governance studies around
the world including India. Corporate Governance seeks to establish a control
system and structure in an organization, guides decision making process to
ensure high degree of accountability to stakeholders and builds credibility by
creating and maintaining an effective channel of information and disclosure.
Thus good corporate governance implies transparency, accountability,
trustworthiness, investors’ protection, adherence to better compliance with
laws and regulations thereby fulfilling disclosure requirements and ultimately
assuring value creation for the stakeholders.
India has been establishing itself as a Software Services providing
Leader for the World. The software companies in India are doing well in spite
of certain hardships faced by them during their operations locally or
nationally. Unless they exhibit a clear, transparent, efficient system of
governance for their day to day operations not only at shop floor level but also
at management level is sine qua non for attracting more funds and other
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facilities from India as well as from other global investors. They have to
come out clearly with their own policies and procedures for their governance
in addition to adhere the various Corporate Governance best practices and
codes issued by Government of India and other leading organizations in the
world. The stakeholders of the software companies should get the perception
that the corporate governance practices are followed by the companies
meticulously so that they can be convinced of the day to day operations are
done as per the law of the land.
The present study has got three objectives. First objective is to study
the existing corporate governance practices available in India and its
adherence by companies in general and software industries in particular,
second objective is to identify the stakeholders’ perception towards corporate
governance practices in software companies in India and the third objective is
to analyze the stakeholders’ perception towards their level of expectation and
satisfaction on corporate governance practices in software companies in India.
This study follows a formal research design. A well designed structured
undisguised questionnaire was administered for 625 respondents. The final
sample of the study consists of 530 investors both men and women in Chennai
belonging to any of the software companies taken for study, namely Infosys,
Wipro, TCS, HCL and Satyam ( now known as Mahindra Satyam). Statistical
tools such as "t test", ANOVA, Kruskal Wallis test, Mann-Whitney U test,
Factor Analysis, Bivariate Correlations were applied to analyze the data
collected to arrive at meaningful conclusions. An attempt is made to propose
a model to achieve the desired satisfaction of perception on corporate
governance practices by using the technique of Structural Equation Modelling.
The details collected from the respondents are in three parts, the first
being the demographic information, second being the perception of
expectation variables and third are perception of satisfaction variables. The
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Likert’s five point scale was used to capture the levels of perception by the
stakeholders. There are twelve hypotheses set to meet the objectives of the
study. The data were tabulated, coded and analysed to understand the pattern
of perception of the stakeholders towards corporate governance practices of
the software companies in India. The findings of the study reveal that Infosys
and Wipro are on the high side of the perception of satisfaction level, wherein
TCS and HCL are on moderate and Satyam at the low level. It addition, most
of the respondents belonging to companies like TCS, HCL and Satyam
requires exposure on corporate governance practices and to improve upon
some of the perception of satisfaction variables.
Good corporate governance ensures that corporations take into account
the interests of a wide range of constituents as well as the communities within
which they operate. Proper governance of a company depends upon certain
factors like professionalism, transparency, participation and relative
importance given to the interest of shareholders. This study focus on
corporate governance practices available in India and its adherence by
companies in general and software companies in particular. The perceptions
of expectations of stakeholders are in unison regarding corporate governance
practices of software companies under study. However there are palpable
differences in terms of perception of satisfaction of stakeholders of selected
software companies taken for study. The suggestions are given based on this
study to the corporates for taking appropriate steps, so as to improve upon the
satisfaction level of corporate governance.
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ACKNOWLEDGEMENT
I praise the Almighty Lord Natarajar and Balaji for their blessings
and merciful benediction on me to enable to complete this stupendous task of
this research work.
I express my gratitude to my guide and supervisor Dr. K. Maran,
Director, Sri Sai Ram Institute of Management Studies, Sri Sai Ram
Engineering College, West Tambaram, Chennai – 44, who’s constant
inspiration and support helped me to reach this goal. My heartfelt thanks are
due to him
I express my thanks to Chancellor, Vice-Chancellor, Registrar,
Dr. A. Thirunavukkarasu, Dean – Research and Dr. S. Ramalingam,
Professor and Head, Department of Management Studies, Dr.. M.G.R.
Educational and Research Institute, Dr. M.G.R. University, for having given
me an opportunity to do my doctoral program in their esteemed institution and
their constant encouragement and support.
My thanks are due to my Management, M/s.Intelligroup Asia (Pvt)
Ltd., Hyderabad for having allowed me to do the doctoral study and their
encouragement and support for completing the research.
I am thankful to Dr. Fatima Jacob, Professor, Dept. of Management
Studies, Anna University, Chennai for all her guidance and support.
I express my sincere thanks to Mr. S. Sankar, Asst. Professor and all
staff at the Department of Management Studies, Sri Sai Ram Institute of
Management Studies, Sri Sai Ram Engineering College, West Tambaram,
Chennai – 44, for their timely help and assistance for this study.
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I am thankful to Dr. R. Gowrisankar, Asst. Professor, Dept. of
English, Presidency College, Chennai for his support in manuscript correction
for English.
I am thankful to Mr. J. Poovaraaghavan, Statistical Analyst for all the
analysis work done on the research data and his team.
I express my sincere thanks to all who helped me in different ways
right from the start of this research work in terms of ideas, knowledge sharing,
and suggestions & advises on this subject till the completion of this thesis.
N. NATARAJAN
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CONTENTS
Chapter No. Title Page No.
Certificate ii
Declaration iii
Abstract iv
Acknowledgement vii
List of Tables x
List of Figures xix
List of Abbreviations xx
I INTRODUCTION 1
1.1 Evolution of Corporate Governance 1
1.2 Software Industries and Corporate
Governance 5
II REVIEW OF LITERATURE 27
III PROFILE OF SOFTWARE COMPANIES 90
IV METHODOLOGY 112
V RESULTS AND DISCUSSIONS 126
VI SUMMARY OF FINDINGS, 216
SUGGESTIONS AND CONCLUSION
BIBLIOGRAPHY
APPENDICES
x
LIST OF TABLES
Table No. Table Name Page No.
5.1.1 Stakeholder's Investment 127
5.1.2 Gender – wise Respondents 128
5.1.3 Age - wise Respondents 128
5.1.4 Educational Qualifications – wise Respondents 129
5.1.5 Occupation – wise Respondents 130
5.1.6 Income – wise Respondents 131
5.1.7 Awareness of Corporate Governance 132
5.1.8 Number of Years of Transaction in Stocks 133
5.1.9 Size of Investments 134
5.2.1 Mean & Standard deviation for the Expectation
variables 135
5.3.1 Mean & Standard Deviation for Satisfaction
variables 139
5.4.1
ANOVA for significant difference between
Software companies & the level of stakeholders
expectation of disclosure of information
145
5.4.2 t-test for Gender with respect to level of expectation
in Disclosure of information to stakeholders 146
5.4.3
ANOVA for Educational Qualifications with
respect to level of expectation of Disclosure of
information
146
5.4.4
ANOVA for Size of Investment with respect to
level of expectation in Disclosure of Information to
stakeholders
147
xi
Table No. Table Name Page No.
5.4.5
Kruskal Wallis & Mann-Whitney U test for
significant difference for gender, educational
qualifications, and size of investments with respect
to expectation in disclosure of information to
stakeholders
148
5.4.6
ANOVA for significant difference between
Software companies & the level of stakeholders
expectation of Corporate communication
149
5.4.7
ANOVA for Educational qualifications with respect
to level of expectation in Corporate communication
to stakeholders
150
5.4.8 ANOVA for Occupation with respect to Corporate
Communication to stakeholders 150
5.4.9
ANOVA for Size of Investment with respect to
level of expectation in Corporate communication to
stakeholders
151
5.4.10
Kruskal Wallis test for significant difference among
educational qualifications, occupation and size of
investments with respect to level of expectation of
stakeholders in Corporate communication
152
5.4.11
ANOVA for significant difference between
Software companies & the level of stakeholders
expectation of Transparency
153
5.4.12
ANOVA for significant difference in Educational
qualifications & level of stakeholders expectation
of Transparency
154
5.4.13
Kruskal Wallis test for significant difference in
educational qualifications & level of expectation in
Transparency
154
5.4.14
ANOVA for significant difference between
Software companies & the level of stakeholders
expectation of General Meeting practices
155
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Table No. Table Name Page No.
5.4.15
ANOVA for significant difference in Educational
qualifications & level of stakeholders expectation
of General Meeting practices
156
5.4.16
ANOVA for significant difference in Occupation &
level of stakeholders expectation in General
Meeting practices
156
5.4.17
ANOVA for significant difference in Age & level
of stakeholders expectation in General Meeting
practices
157
5.4.18
ANOVA for significant difference in Size of
Investment & level of stakeholders expectation in
General Meeting practices
158
5.4.19
Kruskal Wallis test for significant difference in
educational qualifications & level of expectation in
General Meeting practices
158
5.5.1
ANOVA for significant difference between
Software companies & the level of stakeholders
satisfaction of Disclosure of Information
160
5.5.2
Post hoc test for significant difference among
Software companies & the level of stakeholders
satisfaction of disclosure of information
161
5.5.3 t-test for Gender with respect to level of satisfaction
in Disclosure of information to stakeholders 162
5.5.4
ANOVA for significant difference in Educational
qualifications & the level of stakeholders
satisfaction of Disclosure of Information
162
5.5.5
ANOVA for significant difference in Size of
Investment & the level of stakeholders satisfaction
in Disclosure of Information
163
5.5.6
Post hoc test for Size of Investment with respect to
the level of satisfaction in disclosure of information
to stakeholders
164
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Table No. Table Name Page No.
5.5.7
Kruskal Wallis test for significant difference in
Gender, Educational Qualifications & size of
investments & the level of satisfaction of Disclosure
of information
165
5.5.8
ANOVA for significant difference between
Software companies & the level of stakeholders
satisfaction of Corporate Communication
166
5.5.9
Post hoc test for significant difference among
Software companies & the level of stakeholders
satisfaction of Corporate communication
167
5.5.10
ANOVA for significant difference in Educational
qualifications & the level of stakeholders
satisfaction of Corporate communication
168
5.5.11
ANOVA for significant difference in Occupation
with respect to level of stakeholders satisfaction of
Corporate Communication
168
5.5.12
ANOVA for significant difference in Size of
Investment & with respect to level of stakeholders
satisfaction of Corporate Communication
169
5.5.13
Post hoc test for Size of Investment with respect to
level of satisfaction in Corporate Communication
among stakeholders
170
5.5.14
Kruskal Wallis test for significant difference among
educational qualifications, occupation & size of
investments & level of satisfaction in Corporate
Communication
171
5.5.15
ANOVA for significant difference between
Software companies & the level of stakeholders
satisfaction in Transparency
172
5.5.16
Post hoc test for significant difference among
software companies & the level of stakeholders
satisfaction in Transparency
173
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Table No. Table Name Page No.
5.5.17
ANOVA for significant difference in Educational
qualifications & level of stakeholders satisfaction in
Transparency
174
5.5.18
Kruskal Wallis test for significant difference for
educational qualifications & the level of
satisfaction in Transparency
174
5.5.19
ANOVA for significant difference among Software
companies & the level of stakeholders satisfaction
in General Meeting
175
5.5.20
Post hoc test for significant difference among
software companies & the level of stakeholders
satisfaction in General Meeting
176
5.5.21
ANOVA for significant difference in Educational
qualifications & level of stakeholders satisfaction in
General Meeting
177
5.5.22
ANOVA for significant difference in Occupation &
level of stakeholders satisfaction in General
Meeting
177
5.5.23 ANOVA for significant difference in Age & level
of stakeholders satisfaction in General Meeting 178
5.5.24
ANOVA for significant difference in Size of
Investment & level of stakeholders satisfaction in
General Meeting
179
5.5.25
Post hoc for Size of Investment with respect to level
to satisfaction in General Meeting among
stakeholders
179
5.5.26
Kruskal Wallis test for significant difference for
educational qualifications, occupation, age, size of
investment & the level of satisfaction in General
Meeting practices
180
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Table No. Table Name Page No.
5.5.27
ANOVA for significant difference among Software
companies & the level of stakeholders satisfaction
in Performance of Board
182
5.5.28
Post hoc test for significant difference among
software companies & the level of stakeholders
satisfaction in Performance of Board
182
5.5.29 t-test for Gender with respect to level of satisfaction
in Performance of Board among stakeholders 184
5.5.30
ANOVA for significant difference in Age & level
of stakeholders satisfaction in Performance of
Board
184
5.5.31
ANOVA for significant difference in Educational
Qualifications & level of stakeholders satisfaction
in Performance of Board
185
5.5.32
ANOVA for significant difference in Occupation &
level of stakeholders satisfaction in Performance of
Board
186
5.5.33
ANOVA for significant difference in Number of
years of transaction & level of stakeholders
satisfaction in Performance of Board
186
5.5.34
ANOVA for significant difference in Size of
Investment & level of stakeholders satisfaction in
Performance of Board
187
5.5.35
Post hoc test for Size of Investment with respect to
level to stakeholders satisfaction in Performance of
Board
188
5.5.36
Kruskal Wallis test and Mann Whitney 'U' test for
significant difference for Gender, age, educational
qualifications, occupation, years of transaction, size
of investment & the level of satisfaction in
Performance of Board
189
xvi
Table No. Table Name Page No.
5.5.37
ANOVA for significant difference among Software
companies & the level of stakeholders satisfaction
of Corporate Management practices
190
5.5.38
Post hoc test for Significant difference among
software companies & the level of stakeholders
satisfaction in Corporate Management practices
191
5.5.39
ANOVA for significant difference in Educational
Qualifications & level of stakeholders satisfaction
in Corporate Management practices
192
5.5.40
ANOVA for significant difference in Number of
years of transaction & level of stakeholders
satisfaction in Corporate Management practices
193
5.5.41
ANOVA for significant difference in Size of
Investment & level of stakeholders satisfaction in
Corporate Management practices
193
5.5.42
Post hoc test for Size of Investment with respect to
level of satisfaction in Corporate Management
practices among stakeholders
194
5.5.43
Kruskal Wallis test for significant difference in
educational qualifications, years of transaction, size
of investment & the level of stakeholders
satisfaction in Corporate Management practices
195
5.5.44
ANOVA for significant difference among Software
companies & the level of stakeholders satisfaction
of Financial practices
196
5.5.45
Post hoc test for significant difference among
software companies & the level of stakeholders
satisfaction in Financial practices
197
5.5.46
ANOVA for significant difference in Educational
Qualifications & level of stakeholders satisfaction
in Financial practices
198
xvii
Table No. Table Name Page No.
5.5.47
ANOVA for significant difference in Occupation &
level of stakeholders satisfaction in Financial
practices
198
5.5.48
ANOVA for significant difference in Monthly
Income & level of stakeholders satisfaction in
Financial practices
199
5.5.49
ANOVA for significant difference in Size of
Investment & level of stakeholders satisfaction in
Financial practices
200
5.5.50
Post hoc test for Size of Investment with reference
to level of satisfaction in Financial practices among
stakeholders
200
5.5.51
Kruskal Wallis test for significant difference for
educational qualifications, Occupation, monthly
income, size of investment & the level of
satisfaction in financial practices
201
5.5.52
ANOVA for significant difference among Software
companies & the level of stakeholders satisfaction
of Secretarial practices
203
5.5.53
Post hoc test for Size of Investment with reference
to level of stakeholders satisfaction in Secretarial
practices
203
5.5.54
ANOVA for significant difference in Educational
Qualifications & level of stakeholders satisfaction
in Secretarial practices
204
5.5.55
Kruskal Wallis test for significant difference in
educational qualifications & the level of
stakeholders satisfaction in Secretarial practices
205
5.6.1
Comparison of variables disclosure, corporate
communications, transparency, general meeting
between Expectation & Satisfaction levels
206
5.6.2 Correlations for factors in Expectation 207
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Table No. Table Name Page No.
5.6.3 Correlation between Eight factors in Satisfaction
level 208
5.6.4
Correlation between Current Indian Corporate
Governance laws as eight factors of level of
satisfaction
209
5.6.5 Eigen values to identify the factors of satisfaction of
corporate governance practices 210
5.6.6 Table of factors and variables 211
xix
LIST OF FIGURES
Figure No. Figure Name Page No.
Figure 1
Model for increasing the stakeholders’
perception of satisfaction in Corporate
Governance practices
214
xx
ABBREVIATIONS
CEO Chief Executive Officer
CFO Chief Financial Officer
CG Corporate Governance
CGS Corporate Governance Score
CII Confederation of Indian Industries
CSR Corporate Social Responsibility
DCA Department of Company Affairs
GAAP Generally Accepted Accounting Principles
HCL HCL Technologies Ltd.,
ICAI Institute of Chartered Accountants of India
ICSI Institute of Company Secretaries of India
ICWAI Institute of Cost and Works Accountants of India
Infosys Infosys Technologies Ltd.
OECD Organization for Economic Co-operation and Development
R&D Research and Development
Satyam Mahindra Satyam Computer Services Ltd.,
SEBI Securities Exchange Board of India
SEC Securities Exchange Commission
SOX Sarbanes Oxley Act
TCS Tata Consultancy Services Ltd.,
TSE Tokyo Stock Exchange
UK United Kingdom
US United States
UTI Unit Trust of India
Wipro Wipro Technologies Ltd.,
xxi
CHAPTER – I
INTRODUCTION
1.1 EVOLUTION OF CORPORATE GOVERNANCE
Corporate Governance has become a key focus in the business around
the world not only for corporations, but also of Government and Quasi
Government authorities. The sudden collapse of business giants like Enron,
World Com and APP around the world sent shockwaves to the International
business community on the very basis of governance of these corporations,
which were key motivators for the heightened interest in Corporate
Governance.1 In Asia, Corporate Governance has further gained momentum,
since the Asian financial crisis in 1997. Good Corporate Governance is a
source of competitive advantage and critical to economic and social progress.2
Corporate Governance is the system of rights, structure and control
mechanism established internally over the management of a listed public
limited company, with the objective of protecting the interests of the various
stakeholders.3
Further it has argued that Corporate Governance is an indirect
mechanism in reducing agency costs and transaction costs imposed by
managers acting in their own interests at the expense of companies and
stakeholders.4 It is suggested that Corporate Governance is the system of
checks and balances, both internal and external to companies which ensures
that companies discharge their accountability to all their stakeholders and act
in a socially responsible way in all areas in their business activity.5 The
Corporate Governance structure specifies the distribution of rights and
responsibilities among different participants in the corporations, such as the
board, managers, shareholders and other stakeholders and spells out the rules
xxii
and procedure for making decisions on corporate affairs.6 In this way,
Corporate Governance is a philosophy by which companies are directed,
monitored, managed and controlled.7
However, the consequence of the
separation of ownership and management was ownership dispersion and that
such dispersion made subsequent monitoring and discipline of management
difficult.8
Corporate Governance is different from corporate management, as the
former is more ethical oriented and the later on operations specific.
Management has the specific connotations of using the available resources
comprising time, resources - finance & human, physical to get the result
delivered.9 Corporate Governance is needed to create a corporate culture of
consciences, transparency and operations.
The various players in Corporate Governance include, Board of
Directors, Non-Executive Directors, Institutional Directors, Audit Committee,
Company Secretary, Accounting Professional, Government and Law making
agencies, shareholders, consumer, vendors, employees and society. The Board
of Directors entrusted with overall directions and management of the affairs of
the company. The various provisions of the companies Act, SEBI Act,
Articles of Association of the company and other applicable Acts. In the
competitive world, Board of Directors must play their role effectively.10
As
the Board of Directors is in charge of the day to day business and management
of the company, it plays a pivotal role in ensuring good Corporate
Governance.11
The non-executive directors should bring in the independent of
thoughts and professional experience. Normally they are motivated by
Governments or by the Board of Directors with approval of members of the
company. They should try to protect the interest of all stakeholders rather than
being an “yes man” to the chairman.12
The concept of Corporate Governance
xxiii
hinges on total transparency, integrity and accountability of the management
which includes non-executive directors.13
The institutional directors are nominated to the Board of Directors, by
financial institutions. In addition to take care of the interest of their institution,
where they belong, they should play a key role in transparency and
accountability. The Government must act with respect to the appointment of
institutional director, in time and put certain amount of responsibility and
accountability towards the general public at large. Audit Committee is another
important instrument of Corporate Governance.14
This is the sub-committee of
the board with minimum three independent directors, having a function of
watchdog of all financial activities. Even though this concept was existing
earlier in West, in India it was brought first by Ministry of Petroleum and
Natural Gas by way of guidelines, and ONGC was the first to establish audit
committee in pursuance of these guidelines.15
The company secretary is an another pillar in Corporate Governance
area. He ensures that the provisions of company’s multifunction activities are
performed. The company secretary has to provide the professional advice to
the chairman and other directors of the Board in taking various decisions,
while observing the letter and spirit of various laws, rules, regulations and
modifications. In the changing scenario, the role of accounting professional is
also changed. They also provide non-financial professional services apart
from traditional auditing work. The auditors are not only responsible to
management and shareholders but also to other stakeholders. They should also
express their expert opinion regarding product profitability, strategic planning,
transparency etc.,.16
The Government and its agencies play a pivotal role in
ensuring Corporate Governance is best practiced. They should perform not
only to exact laws, but also exercise the required supervision that all the
provisions of law, rules, regulations and notifications are followed by
xxiv
corporates. Though by enacting laws, the level of responsibility and
accountability can be increased, the implementing agencies have to play a
major role for the implementations of enacted laws for good Corporate
Governance.17
The Shareholders are spread across the globe. Even though most of
them are satisfied with dividends, but still they should participate in annual
general meeting and try to find out the relevant information to make sure that
the company is run properly. They should not hesitate in demanding
additional information from the Directors and unite themselves for good
Corporate Governance.18
Consumers and vendors are other integral part of
Corporate Governance, since both procure and provide services respectively
to the company. Wherever the consumers have grievance, they are to be
properly redressed by company. The company should behave as a responsible
corporate citizen because the company has to sustain in a society and the
consumers are the inevitable part of the society.
SEBI is doing all within its
powers to protect the interests of and also educate the investors. 19
Vendors are to proactive and they want to deal with a company which
is transparent, fair and justified, hence companies should maintain cordial
relationship with their vendors. Some good companies offers shares to their
vendors as a strategic partners to make them more responsible vendors, by
becoming shareholders, they should work for good Corporate Governance.20
Employees also play a crucial role, as they know the correct inside
information about the company. In order to achieve a good Corporate
Governance, they should not be satisfied with their salary only, but also to
take part in day to day functioning of the company as their future is at stake
along with future of the company and wherever it is appropriate they have to
apply whistle blower method to inform appropriate authorities about mis-
happenings in the company.
xxv
1.2 SOFTWARE INDUSTRIES AND CORPORATE GOVERNANCE
Among the various industries present in an economy, software
industries have got a special status as being a major foreign revenue earner for
India. Lot of investors from India and abroad invested their money in leading
software companies in India. Also financial institutions have invested public
funds in such software companies. Hence the good governance in software
companies is the need of the hour, after witnessing lot of scandals across the
globe in corporate sector. India as well as International communities are
taking appropriate steps to ensure good corporate governance in corporates.
Various committees were appointed and based on their reports codes,
regulations and guidelines were issued.
A number of reports and codes on Corporate Governance have already
published and are being implemented internationally as well as in India.
Among the codes came internationally, the notable ones are the Cadbury
Committee report, the Hample Committee report, Blue Rippon Committee
report, the King committee report, the Organization for Economic
Cooperation and Development (OECD) code etc., The important codes and
reports from India include the Confederation of Indian Industry (CII) code,
Kumar Mangalam Birla Committee report, the Godbole Committee report,
Naresh Chandra Committee report and Narayana Murthy Committee report.
The Cadbury committee was under the chairmanship of Sir Adrian
Cadbury in 1992 by London Stock exchange and accounting profession of
U.K. the committee submitted its report wherein it recommended guidelines
for the Board of Directors.21
Committee gave twenty two recommendations,
with reference to Board of Directors, non-executive directors, executive
directors and independent directors.
xxvi
The Hample committee on the Corporate Governance was formed
under the chairmanship of Sir Ronald Hample in 1998 at U.K to review the
impact of Cadbury code. The committee has issued a list of governance
principles related to role of directors, remuneration, role of shareholders,
accountability and audit. The committee has also acknowledged the fact that
the importance of Corporate Governance lies in its contribution both in terms
of attaining business prosperity and insuring accountability of the board.22
The
Blue Rippon Company was jointly sponsored by the Newyork Stock
Exchange (NYSE) and National Association of Security Dealers (NASD) for
improving the working of corporate audit committees. The salient
recommendation given by the committee on audit committee were 1) the
members of the audit committee should be independent directors and financial
literate, 2) external auditors should periodically discuss quality of company’s
accounting principles in relation to Generally Accepted Accounting Principles
(GAAP) with the audit committee, 3) statutory auditors should maintain their
independence in discharging their professional responsibilities and 4) on an
annual basis the committee should review and discuss accountants all
significant relationship they have with the corporations to determine their
independence. The Blue Rippon committee also recommended a formal
written charter for audit committee.23
The King Committee was set-up in 1994 in South Africa at the instance
of the Institute of Directors of South Africa with support from the South
African Chamber of Business and the Chartered Institute of Secretaries and
Administrators. The committee was requested to enquire and recommend 1)
code of practice on the financial aspects of Corporate Governance of South
Africa, 2) simple reporting without sacrificing quality of information, 3)
guidelines for ethical practices and 4) to provide appropriate safeguards for
entry of disadvantaged communities in South Africa into business. The
xxvii
committee gave its detailed recommendation which includes among other
things which were said above, the corporate should have an effective internal
audit function and establish audit committee with written terms of reference
from the board.24
The Organization for Economic Cooperation and
Development (OECD), came out with its own “Principles of good
Governance”, which includes the majority of directors should come from
outside of the company, the board should protect the rights of shareholders
including the minority shareholders, provide timely and accurate disclosures
of company’s financial performance and effectively monitor management.25
The Confederation of Indian Industry (CII) was the first business
association to come out with a code of Corporate Governance in India. It has
suggested number of measures, which includes relevant details about Global
Depository Receipt issue, companies to follow the Generally Accepted
Accounting Principles (GAAP) with transparent accounting system, providing
the details of high and low monthly averages of share prices at all stock
exchanges where the companies listed for the reporting year and a value added
statement disclosing total income, cost of all inputs and all administrative
expenses, details of debt performance, interest costs, state of receivables and
foreign exchange risks and exposure.26
The Kumar Mangalam Birla
committee under the chairmanship of Kumar Mangalam Birla was constituted
by Security Exchange Board of India (SEBI) in May1999 to promote
investor’s interests and to raise the standards of Corporate Governance in
India. The committee stated the fundamental objective of the Corporate
Governance is the “enhancement of shareholder value, keeping in view the
interest of other stakeholders”.27
The committee came out with both mandatory and optional
recommendations. The listed companies are obliged to follow the mandatory
recommendations as these recommendations form a part of contractual
xxviii
obligations as per the listing agreement with Stock Exchange. The various
mandatory recommendations include holding minimum four board meetings
in a year, fifty per cent of the Directors of the Board should be non executive,
presence of audit committee recommended with minimum of three members
and the chairman being non-executive. Also committee various disclosures
like consolidated accounts of subsidiary, segmental reporting, details about
related party transactions social and environmental reporting, and formation of
investors grievances committee.28
The Godbole committee was setup by the
former union Home Secretary Madhav Godbole in 2001 to provide guidelines
on good governance for the Government. The committee came out with 190
recommendations for better governance. The salient recommendations
includes, compulsory retirement of Government officials and enacting a law
on fiscal responsibility and budget management etc., .29
The Naresh Chandra Committee gave both mandatory and non-
mandatory recommendations, for amending the listing agreement under clause
49. The salient recommendations were that all listed companies, there should
be a certification by the CEO (either the Executive Chairman or the Managing
Director) and the CFO (whole-time Finance Director or other person
discharging this function) which should state that, to the best of their
knowledge and belief - they have reviewed the balance sheet and profit and
loss account and all its schedules and notes on accounts, as well as the cash
flow statements and the Directors' Report; these statements do not contain any
material untrue statement or omit any material fact nor do they contain
statements that might be misleading; these statements together present a true
and fair view of the company, and are in compliance with the existing
accounting standards and or applicable laws / regulations; they are responsible
for establishing and maintaining internal controls and have evaluated the
effectiveness of internal control systems of the company; and they have also
xxix
disclosed to the auditors and the Audit Committee, deficiencies in the design
or operation of internal controls, if any, and what they have done or propose to
do to rectify them they have also disclosed to the auditors as well as the Audit
Committee, instances of significant fraud, if any, that involves management or
employees having a significant role in the company's internal control systems;
and they have indicated to the auditors, the Audit Committee and in the notes
on accounts, whether or not there were significant changes in internal control
and / or of accounting policies during the year. 30
The Narayana Murthy committee has given recommendations on audit
committees, audit reports and audit qualifications, related party transactions,
risk management, proceeds from Initial Public Offerings, Code of Conduct,
Nominee directors, non-executive director compensation, independent
directors, whistle blower policy, subsidiary companies, real time disclosures,
evaluation of board performance, analyst reports and touched upon the most
of the recommendations given by the Naresh Chandra committee. Also the
committee suggested for harmonization, removal of independent directors,
disgorgement of profits, term of office of non-executive directors, corporate
governance ratings, media scrutiny and the steps to be taken to implement the
recommendation of the committee. The committee came out with solid
recommendation which are mandatory, which needs to be incorporated in the
listing agreements by SEBI. It also gave voluntary recommendations which
the corporates may follow for their own benefit of transparency, good
governance and management.31
Further the three premier institutes of India
namely the Institute of Company Secretaries of India (ICSI), the Institute of
Chartered Accountants of India (ICAI) and the Institute of Cost and Works
Accountants of India (ICWAI) have contributed to the cause of Corporate
Governance growth in India.
xxx
There are certain remarkable developments happened in some of the
countries around the world which requires the attention. As the Corporate
Governance is important for each and every country, the countries have
developed their own codes and rules to best suit their societal requirements.
The required measures were taken by most of the companies and as per the
level of compliance reported by eStandardsforum.org, it varies from full
compliance, which is the highest form of adoption and compliance of
Corporate Governance principles as envisaged by OECD, to insufficient
information, being the lowest with varying levels as compliance in progress,
enacted, intent declared, and no compliance in the order of declining levels.
The OECD Principles represent the minimum standard on which countries
with different traditions could agree, without being unduly prescriptive. They
are meant to be equally applicable to countries regardless of prevailing
ownership structures, a civil or common-law tradition or the dominant model
of board representation. The World Bank benchmarks the corporate
governance framework and company practices of countries against the OECD
Principles as part of the "Reports on the Observance of Standards and Codes"
(ROSC) initiative. The summary about the corporate governance growth in
various countries were re-produced below as reported in their website by
eStandardsforum.org.32
In Australia, according to a 2006 report published by the International
Monetary Fund (IMF), the corporate governance framework in Australia is
"largely healthy and dynamic" and built on a solid legal and regulatory
foundation. The report finds that shareholder activism is high and periodic
disclosure requirements are in line with international best practices and exceed
the requirements in many other countries. Overall, implementation and
enforcement of disclosure and corporate governance requirements was found
to be strong, specifically among the top tier listed companies. However, there
xxxi
seems to be a significant gap in corporate governance disclosure compliance
between larger listed companies and smaller companies. The IMF notes that
following the implementation of the reforms introduced under the Corporate
Law Economic Reform Program Act (CLERP 9) of 2004, the Australian
Government strengthened auditor independence and improved financial
reporting and disclosure. In addition, in 2003, the Australian Securities
Exchange (ASX) Corporate Governance Council released its Principles of
Good Corporate Governance Practice and Best Practice. They were updated in
August of 2007, and in April 2010 a new draft of the Principles was released
for public comment. The draft includes recommendations on board diversity,
executive remuneration and trading policies. The ASX Principles are not
prescriptive and listed entities follow a comply-or-explain approach towards
compliance. The oversight authority for corporate governance is the
Australian Securities and Investments Commission which is considered to
have wide-ranging enforcement powers. The level of compliance is
“compliance in progress”
In China, a system of corporate governance has emerged as a result of
enterprise, legal, institutional and regulatory reforms. In January 2001, the
China Securities Regulatory Commission (CSRC) issued the Code of
Corporate Governance for Listed Companies in China. Based on the "comply
or explain" principle, the Code has “strictly followed” the Organization for
Economic Cooperation and Development Principles of Corporate Governance,
according to a 2003 article by Violet Xing. Revisions to the Company Law
and Securities Law in 2006 have also strengthened minority shareholder rights
and disclosure requirements for listed firms. The publication of Basic
Standard for Enterprise Internal Control in 2008, to be implemented over
time, signals another important step towards enhancing corporate governance.
However, highly concentrated ownership structure, the dominance of state
xxxii
owned enterprises, and the resulting weak minority shareholder protection
remain as major obstacles to develop a corporate governance culture in China.
Lu et al. also note that the gap between good and poor corporate governance
among listed companies is significant. Various recommendations are being
put forth to improve corporate governance in China, including speeding up
share reform, shareholding diversification, reducing Government intervention
in state owned enterprises, improving minority shareholder rights, and
enhancing board structure and responsibility. The level of compliance is
“intent declared”.
Over the last decade, major changes have occurred within the scope of
corporate governance in France. Two laws were passed to strengthen the legal
foundation of corporate governance: the May 2001 Law on New Economic
Regulations and the August 2003 Financial Security Law. These laws
specifically target transparency and ethics within companies. The unified
French financial regulator, the Financial Markets Authority (AMF) was
created by the 2003 Law. Since then, France seems to have continued to take
measures in strengthening its corporate governance framework. The AMF’s
2008 Annual Report states that the Act of 2008 (DDAC Act) transposed the
European Union Directives on statutory audits and company reporting into
French Law. According to the report, the DDAC Act reinforces the
transparency requirements for the corporate governance practices of
commercial firms. In December 2008, the French Association of Private
Enterprises (AFEP) and the French Employers’ Federation (MEDEF)
published a Corporate Governance Code. As of January 2010, most
companies currently included in the CAC 40 have adopted the AFEP-MEDEF
Corporate Governance Code as their reference code in the drafting of their
chairman’s report. On January 20, 2010, the French National Assembly
started debating a bill that would require management boards and boards of
xxxiii
directors to comprise of at least 40 per cent women, within the next 6 years.
The level of compliance is “enacted”.
According to a 2003 Financial System Stability Assessment by the
International Monetary Fund, Germany has taken steps to improve corporate
governance in line with international best practices. In 2002, the Government
Commission of the German Corporate Governance Code (Cromme
Commission) established a Corporate Governance Code for listed companies
based on the comply-or-explain principle. The Code has been continuously
revised, with the latest amendment as recent as 2009, to strengthen disclosure
and shareholder rights. Previously, other initiatives targeted at strengthening
the functioning of the corporate governance structure included the prohibition
of insider trading in 1994, the 1998 Law for Reinforcement of Control and
Transparency (KonTraG) which aimed to enhance the control of the
supervisory board, and the 1998 Antitrust Act. More recently, the German
Parliament also adopted the Appropriateness of Management Board
Remuneration Act in September 2009 The Act introduces changes with
respect to the remuneration of the management board and also introduces
“say-on-pay’, a non-binding advisory vote on remuneration for listed
company shareholders. Nonetheless, in a 2008 IMF Working Paper, Odenius
notes that despite far-reaching reforms of the last decade, concentrated
ownership and “insider” control remain distinguishing features of Germany’s
corporate governance system. Furthermore, ownership structures remain
complex and work against transparency in corporate control. The author
points out that improvement is required in internal control mechanisms,
particularly with respect to the two-tier board structure. The level of
compliance is “enacted”.
The Japanese corporate governance framework is based on codes,
regulations and laws. The Tokyo Stock Exchange (TSE) issued Principles of
xxxiv
Corporate Governance for Listed Companies in 2004 which were revised in
December 2009 and a new Company Law came into force in May 2007,
replacing provisions of the Commercial Code that relate to companies. In
response to the corporate governance scandals of 2007, the Japanese
Government also introduced guidelines informally known as Japanese
Sarbanes-Oxley or J-SOX which became effective in April 2008. Despite this
progress, the Asian Corporate Governance Association's (ACGA) 2008 White
Paper asserts that the lack of shareholder activism and extensive cross-
shareholding impede structural change. Multiple sources on the subject point
out that the biggest issue in Japanese corporate governance is the lack of
independence in the composition of boards of directors which are largely
dominated by management. Contrary to good corporate governance practices,
a high proportion of company board members are promoted from among
employees. Efforts are on-going to address some of these issues. For instance,
the TSE published new rules in December 2009 relating to independent
directors. Earlier, in September 2009 the TSE laid out its Listing System
Improvement Action Plan proposing at least one independent director or
auditor and disclosure of names of the independent director/auditor. The
Ministry of Economy, Trade and Industry established a Corporate Governance
Study Group to deliberate on rules for improving corporate governance and
the Financial Services Agency in 2009 issued a set of reports and proposals in
order to address investor complaints about deficiencies in corporate
governance. The level of compliance is “intent declared”.
In Russia, during 2004, the European Bank for Reconstruction and
Development's (EBRD) Corporate Governance Sector Assessment concluded
that Russian corporate governance legislation was in "high compliance" with
the Organization for Economic Cooperation and Development (OECD)
Principles of Corporate Governance. These results, as reported in the EBRD
xxxv
2009 Country Strategy report, were reiterated in a 2007 EBRD evaluation on
the corporate governance related “laws on the books.” In addition to the law
on the books, in 2002, the securities market regulator issued a Code of
Corporate Governance Conduct, which is voluntary and is implemented on a
"comply or explain" basis. The Code is based on the OECD principles of
corporate governance. A 2010 draft law amending the Law on Joint Stock
companies introduced restrictions for cross holding of a company through its
subsidiary structures. However, various sources point out that corruption and
lack of corporate transparency pose significant challenges in Russia. In
addition, a number of reports indicate that shareowner rights are not
effectively implemented and that law enforcement remains inconsistent. There
is also increasing state intervention in businesses further impeding
implementation of shareholders rights. A 2004 Institute of International
Finance report noted that equity culture in Russia has historically been weak,
undermining minority shareholders' rights and called for a significant reform
of the court system to secure minority shareholders' rights. The level of
compliance is 'enacted'.
South Africa has made significant progress in its corporate governance
reform since the mid-1990s. The breadth and sophistication of its practices
and rules qualify them as some of the best among emerging market
economies, according to assessments by both the World Bank and the Institute
of International Finance (IIF). The New Partnership for Africa's Development
states in a 2007 report that South Africa has adopted the Principles of
Corporate Governance developed by the Organization for Economic
Cooperation and Development. It also complimented South Africa for its
promulgation of the King I and II Reports, which has strengthened the
corporate governance framework. South Africa has been relying on a self-
regulation corporate governance approach as evidenced by the comply-or-
xxxvi
explain format of compliance with the King Code. However, according to the
IIF assessment, the spirit of the disclosure required under a voluntary
compliance environment has been embraced by only a few South African
companies. In addition, enforcement has been fragmented between three
different institutions, the Financial Services Board, the Department of
Trade and Industry, and the Companies and Intellectual Properties
Registration Office, creating a weak enforcement culture. A new Companies
Act was signed into law in 2009 and will take effect on July 1, 2010. The Act
is expected to enhance corporate governance and empower shareholders. It
also codifies the standard for directors' conduct and holds directors
accountable where the standard is not met. Also in 2009, the King Committee
released the draft King III, which applies to all entities and takes an "apply or
explain" approach. King III has taken effect in March 2010 and replaced. King
II. The level of compliance is “enacted”.
According to 2008 report by Roger Barker published on the Institute of
Directors website, the UK model for corporate governance is a good balance
between law and self – regulation. A 2003 International Monetary Fund
assessment noted that the UK is among the leading countries globally in
setting standards for corporate governance, including public disclosure
practices. Due to its success, 26 out of 27 European Union Member States
have adopted UK-style corporate governance codes in the last few years. The
paper argues that the current financial crisis should be interpreted as a failure
of the UK corporate governance regime and therefore, the focus should
remain on improving the practical application of the existing corporate
governance framework rather than introducing new initiatives. For instance,
the revised combined code, adopted in 2003 and further amended in 2006 and
2008, contains some of the most advanced recommendations internationally in
such areas as board independence, the separation of CEO and chairman
xxxvii
positions, and information disclosure. In March 2009, the Financial Reporting
Council initiated another review of the combined code to further update and
strengthen its recommendations in light of recent developments. Based on the
comply-or-explain rule, the code requires companies to report annually on
their corporate governance practices, and account for deviation from the
code’s recommendations. The new companies act of 2006 provides a number
of changes to increase directors’ accountability to the company as a whole,
strengthen shareholder rights minority shareholders in particular and require a
Business Review to encourage transparency and improve shareholders’ ability
to assess progress, or lack thereof. In addition, the European Union’s
Takeover Directive and Transparency Directives introduced new criteria for
transparency and disclosure. The level of compliance is “compliance in
progress”
Over the last decade, following various corporate scandals, corporate
governance has risen to the forefront of public attention in the United States.
Recently, the debate became even more relevant as the financial crises
highlighted corporate governance failures and lack of adequate risk
management procedures and in general weaknesses of the arm’s length system
in which responsibility for supervising managers is delegated to a board
representing external shareholders. The lapses in financial reporting in the
early 2000s resulted in the 2002 Sarbanes-Oxley Act (SOX), which brought
about significant changes in the U.S. corporate governance regime. The Act
strengthened rules on board independence and the role of audit committees,
tightened reporting and disclosure requirements, made certification by chief
executive officers of quarterly financial statements mandatory, and
established the Public Company Accounting Oversight Board, with a mission
to oversee audits of public companies and related matters. The recent crisis
moved the spotlight on to issues such as board practices, implementation of
xxxviii
risk-management, remuneration processes, and the exercise of shareholder
rights. Changes on these issues are on-going and concerned authorities are
working towards overhauling the regulatory framework. According to a
2010 PricewaterhouseCoopers (PWC) report, the Securities Exchange
Commission (SEC) is working on a package of reform measures directed at
improving the quality of information provided by companies and
strengthening the rights of shareholders, i.e. by allowing them to nominate
directors. Most significantly, given the controversy surrounding executive
compensation, a proposal was made in July 2009 that would require
companies to describe their controls over employee compensation policies.
The level of compliance is “intent declared”.
1.3 PROBLEM FOCUS
With the advent of liberalization process, India’s economic scenario
has begun to alter radically with global impacts. As the growth of various
industries scaled up in terms of turn over with huge revenue and export
business, it also brought in the risk of finance mismanagement and arbitrary
decisions which eventually affected the stakeholders by way of business
losses, exodus of valuable cash reserves, no-accountability by officers of the
company on the pre-text of economic meltdowns. Among the various
industries that were suffered because of this scenario, the one that was hit is
software industries in India. Hence this study is aimed to understand as what
are the corporate governance practices that are followed by industries in
general and software companies in particular in Indian context, to identify the
stakeholders perception towards corporate governance practices in software
companies in India and their level of expectation and satisfaction on various
factors that run across the corporate world.
1.4 OBJECTIVES OF THE STUDY
xxxix
1. To study the existing corporate governance practices available in
India and its adherence by companies in general and software
industries in particular.
2. To identify the stakeholders’ perception towards corporate
governance practices in software companies in India.
3. To analyze the stakeholders’ perception towards their level of
expectation and satisfaction on corporate governance practices in
software companies in India.
1.5 SCOPE OF THE STUDY
The study proposes to analyse the present corporate governance
practices in software companies in India in five select companies, Infosys,
Wipro, TCS, HCL and Satyam. A questionnaire was prepared and
administered to the respondents to elicit required information about their
perception on corporate governance in those software companies where they
invested. The corporate governance as such is very wide, encompassing
different key areas like Board of Directors, their appointment, separation of
Chairmanship and CEO duties, Independent Directors and their role, tenure,
remuneration, various committees of Board like Audit, Remuneration etc.,
their responsibilities, Auditors appointment and their duties, Secretarial Audit
and Whistle Blowing mechanism etc., Since to evaluate the perception of all
these things requires a high calibre and professional skills in stakeholders, the
questionnaire is restricted with general questions which they can comprehend
and understand and through which the study tried to conceive stakeholders
perception.
There is a great demand and growth in software industry especially the
products and services selling by Indian software companies. The software
xl
companies continue to be the major foreign revenue earner for the country.
Hence the software companies’ stability and growth is vital for India's
continuous growth and corporate governance plays an important role in
ensuring such stability. Every effort is taken to collect as much information as
possible to reach plausible inference on various variables thus collected.
1.6 SIGNIFICANCE OF THE STUDY
The significance of corporate governance is now widely recognised,
both at National and International level. Corporate governance is not at its
core about power; it is about finding way to ensure that decisions are made
effectively. 33
The stakeholder’s expectations require the addressing of the
converging interests of competitiveness, corporate citizenship, and social and
environmental responsibility. Now the trend is to report on triple bottom line
rather than single, which includes economic, environmental and social aspects
of a company’s activities. The economic aspect involves the well-known
financial aspects as well as the non-financial ones relevant to that company’s
business. The environmental aspects include the effect on the environment of
the product or services produced by the company. The social aspects includes
values, ethics and the reciprocal relationships with stakeholders other than just
the shareowners. There is an endeavour now through the Global Reporting
Initiative, IFRS (International Financial Reporting Standards) to lay down
guidelines on how a company should report on the triple bottom line.
The Investor Opinion Survey published in June 2000 by McKinsey &
Co.,34
working with Institutional Investors Inc., found that good governance
could be quantified and was significant. The survey found that, more than
84% of the more than 200 global institutional investors, together representing
more than US$3 trillion in assets, indicated a willingness to pay a premium for
the shares of a well-governed company over one considered poorly governed
xli
but with a comparable financial record; and in developed markets the
premium could go as high as 18%: in emerging markets or markets perceived
to have poor governance practices, this premium escalated to 22%.
The implications for companies are profound as considerable
shareowner value can be added by simply developing good governance
practices. The creation of a good governance culture can make companies and
countries, especially in emerging markets, attractive to global investors.
Whilst there can be no single generally applicable corporate governance
model, international guidelines have been developed by the Organization for
Economic Co-operation and Development (OECD), the International
Corporate Governance Network, and the Commonwealth Association for
Corporate Governance.
1.7 ORGANIZATION OF THE STUDY
The whole study is divided into six chapters, starting with Introduction
as chapter 1 which was discussed so far is introductory in nature, tracing the
evolution of the corporate governance and its practices highlighting the
problem focus, objectives, scope, significance and organization of the study.
The chapter II discusses with a comprehensive review of various research
studies conducted in foreign countries and India. Literature survey suggests
how the progress in the CG compliance, the research work done by various
investigators over the period of time in corporate governance, the research gap
identified and how the present study aims to bridge the gap. Chapter III
provides a vivid description about the select software companies taken for
study namely Infosys, Wipro, TCS, HCL and Satyam, their profile, business
activities, products and services offered etc., Chapter IV elaborates on the
research design followed in this study, the source of data, research techniques,
statistical tools used, hypotheses set for the study and the limitation of the
xlii
present study etc., Chapter V narrates the results of the analysis done on the
survey taken up through questionnaire, the inferences arrived at and their
interpretation thereof. An attempt is made to propose a model to achieve the
desired level of satisfaction of various factors deduced in the study for the
stakeholders and to increase the company’s value to attract more inflow of
funds locally and globally. The last Chapter, VI summarises the findings of
the study along with their interpretations and conclusions based on the
evaluation made in the previous chapters and appropriate suggestions for
future research have been presented.
1.8 CONCLUSION
The corporate governance is still on evolving stage
in different countries, India being at a crucial stage of
growth, requires an organised and well implemented
CG in all sectors of business activities. In the wake of
the recent corporate turbulence, it raises the question at
the top of the mind of the stakeholders as whether good
corporate governance is totally legally enforceable.
Therefore a conscientious approach to achieve good
practices of CG and to continuously create value to the
stakeholders and to the nation through both regulatory
system as well as voluntary mode is the paramount
importance.
xliii
END NOTES
1. Anandarajah, K., 2004, ‘Corporate Governance in Asia in a Post-Enron
World’ in The Practitioner’s Guide to Corporate Governance in Asia,
ISI Publications Limited, Hong Kong.
2. Iskander, M.R., and Chamlou, N., 2000. ‘Corporate Governance: A
Framework for Implementation’. World Bank Group, Washington.
D.C., U.S.A
3. Nielsen, J. D., 2000, ‘The Role of Institutional Investors in Corporate
Governance’.
4. Kidd, J. B. and Richter, F., 2003, ‘Corruption and Governance in Asia’,
Palgrave Macmillan, New York.
5. Solomon, J., and Solomon, A., 2004, ‘Corporate governance and
accountability’ John Wiley & Sons Ltd, England.
6. Clarke, T., 2004, ‘Cycles of Crisis and Regulation: the enduring agency
and stewardship problems of corporate governance’ Corporate
Governance An International Review, Vol.12 (Apr).Issue 2:pp153-161.
7. Mehta, G.S., ‘Dharma in Corporate Governance,” The Chartered
Accountant, December 2003, pp. 677-78.
8. Berle and Means' , A monograph on "The Modern Corporation and
Private Property" Macmillan, 1932
9. Vittal, N., “Corporate Governance: Principles and Objectives,” Vision,
Vol. 2, No. 2, July-December 1998, pp. 18-22
xliv
10. Lobwo, Samir, Kr., “Corporate Governance: Role of the Board of
Directors,” The Management Accountant, Vol. 35, No. 10, October
2000, pp. 770-73.
11. Narayanaswamy T.V. 2002, “Corporate Governance and Board of
Directors”, The Chartered Secretary, Journal of The ICSI, New Delhi,
200212420404
12. Datta, S., “Role of Non-Executive Directors in Corporate Governance,”
Chartered Secretary, Vol. XX VIII, No.9, September 1998, pp. 849-51.
13. Sanjiv Agarwal 2002, “Corporate Excellence – A Product of good
Corporate Governance”, The Chartered Secretary, Journal of The ICSI,
New Delhi, 200212420604
14. Gopalswamy, N., “Corporate Governance; The New Paradigm,”
Wheeler Publishing, New Delhi, 2002, pp. 64-65
15. Datta, S., “Corporate Governance; Role of Audit Committee,” The
Management Accountant, Vol. 35, No. 7, July 200, pp. 502-09.
16. Ghosh, T.P., “The Role of. Chartered Accountants - The Three Pillars
of Wisdom,” The Chartered Accountant, August 2000, pp. 13-20.
17. Israni, S.D., “It’s Time or Better Governance,” The Economic Times, 9
December 2000, p. 5
18. Daryal, V., and Sehgal, V.K., “Corporate Governance in India— A
Challenge before Different Players,” Edited book by Singh, D. and
Garg, S., First Edition, Wheeler Publishing, New Delhi, 2000, pp. 46-
47.
19. Sridhar, J., “SEBI’s Role in Enhancing the Image of Indian Corporate
Sector,” Chartered Secretary, August 2001, pp. 869-77.
20. Pati, A.P., and Moharana, S., “Redefining the Role of Major Players in
Corporate Governance,” The Indian Journal of Commerce, Vol. 51,
No. 4, October-December 1998, pp. 139-45.
xlv
21. Boyd, Colin, “Ethics and Corporate Governance: The Issues Raised by
the Cadbury,” Report in UK, Journal of Business Ethics, Vol. 15, 1996,
pp. 167-82.
22. Mayer, Cohn, “Financial Systems and Corporate Governance: A
Review of International Evidence,” Journal of Institutional and
Theoretical Economics, Vol. 154, No. 1, 1998, pp. 45-55.
23. Tricker, Robert I., “international Corporate Governance,” Third
Edition, Prentice Hall, Singapore, 1998, pp. 465-70.
24. Naughton, T., “Corporate Governance: An International Perspective,”
The ICFAJ Journal of Corporate Governance, Vol. II, No. 3, July 2003,
p. 90.
25. www.oecd.org / Daly corporate-affairs / governance
26. Goswami, “Desirable Corporate Governance: A Code (CII Code), “in
Gopalsamy, Corporate Governance - The New Paradigm, Wheeler
Publishing, New Delhi, 1998, p. 74.
27. Report of the Committee Appointed by the SEBI on Corporate
Governance under the Chairmanship of Kumar Mangalam Birla,
Chartered Secretary, March 2000, pp. 373-85.
28. www.sebi.gov.in
29. Godbole, M., “GodBole Releases Good Governance Report,” The
Economic Times, 26 July 2001, p.3.
30. www.dca.nic.in
31. Report of the SEBI committee on Corporate Governance, 2003
32. eStandardsforum.org, Principles of Corporate Governance compliance,
Financial Standards Report
33. Harvard Business Review on Corporate Governance 2000, “The
Promise of the Governed Corporation” – John Pound, HBS Press,
Boston, MA, pp. 79-103
34. Investor Opinion Survey, June 2000, McKinsey & Company
xlvi
xlvii
CHAPTER – II
REVIEW OF LITERATURE
2.1 INTRODUCTION
It is essential to go through and review the literature available in the
field of research study. Even though the way and method by which the
corporate governance practiced may differ in different countries, the objective
and basic principles are similar. Several studies have been undertaken to
understand the corporate governance and its implications in different
economies around the world. This chapter presents some of the studies done
in the past by the corporate analysts.
2.2 REVIEW OF LITERATURE
Adam Smith’s (1776)1 view on the investors was that they seldom
pretend to understand anything of the business of the company. According to
him, “Directors, being the managers of other people's money rather than of
their own, it cannot well be expected that they should watch over it with the
same anxious vigilance with which the partners in a private co-partnership
frequently watch over their own.”
Jenson and Fama (1983)2 found that in modern corporations,
especially in United States and United Kingdom, primary objectives of
corporate governance is to ensure that the interests of top-level managers are
aligned with shareholder’s interests. Corporate Governance involves oversight
in areas where owners, managers and board of directors may have conflicts of
interests. The areas include the selection of directors, supervision of Chief
xlviii
Executive Officer and director pay; and the corporation’s overall structure and
strategic direction.
Tricker (1984)3 explained that there is a difference between
management and governance. He is of the view that while management is
about running the business, governance is for running it properly.
Governance identifies rights and responsibilities, legitimizes actions and
determines accountability.
Jensen (1989)4 in his study observed that companies having outside
directors with little or no equity stake in the company are proven not effective
in terms of monitoring and disciplining the manager.
Bradbury (1990)5 in his study came out that by appointing an audit
committee, the companies a) Impose costs unevenly if differences exist
between companies in the costs and benefits of monitoring packages; b)
transfer resources from existing monitoring activities on the assumption that
monitoring expenditure is limited; and c) prevent from signaling information
by the choice of an audit committee as monitoring mechanism.
Roe (1990)6 in this study stated that governance could be seen as
competition’s assistant; good governance speeds competitive adaptation; bad
governance slows it down. He concluded that the main function of corporate
governance system is to improve efficiency by providing adequate incentives
for value enhancing investments.
Tuteja (1992)7 in his study found that there is no co-relation between
the size of the board and governance objectives. He further added that an
average size of the board should be 10, though the range can vary from three
to fifteen members.
xlix
Humphery (1993)8 stated that third parties have a key role to play in
ensuring the accountability of directors and management, especially auditors
and non-executive directors. This in turn raises the question of what their
roles are expected to be and the difficulties in carrying them out. The
existence of a gap between what auditors are legally required to do and what
they are expected to do by society in general is a manifestation of the
problem.
Charkham (1994)9 pointed out that every country wants the firms that
operate within its territories to flourish and grow to such ways as to provide
employment, wealth and satisfaction not only to improve standards of living
materially but also to enhance social cohesion. These aspirations cannot be
met unless those firms are competitive internationally in a sustained way and
it is this medium and long-term perspective that makes good governance so
important,
Conyon and Leech (1994)10
studied the influence of corporate
governance variables upon executive pay awards. They found that whilst
ownership control and concentration depress the level of director pay, these
variables have no effect on the growth in the director’s pay. Moreover,
separating the role of chairman and chief executive has no effect on the level
or growth in directors pay.
Robert A.G. Monks and Nell Minow (1995)11
have shown concern
on the shareholder’s interest stating that there should be a system to make the
manager care as much about the company’s performance as the shareholders.
They opine that the shareholders should know that the assets they own are not
being mismanaged or even embezzled.
l
Felton, Hudnet and Witt (1995)12
in their study pointed out that the
decisions and actions of a corporation’s board of directors can be effective
deterrent to unethical behaviours. In fact, the most effective boards participate
actively in setting boundaries for business ethics and values.
Mehran (1995)13
in his study found that unless a substantial
component of outside director’s compensation is tied to firm performance,
that is by stock options, their capital risk may not be large enough to motivate
them to monitor the management team. Further he suggested that
outside/independent director should be suitably compensated for their services
so that they work effectively.
Wolneizer (1995)14
in his study found that although audit committees
may strengthen auditor independence and enhance public confidence in the
integrity of the financial reporting process, the objective of an improvement in
the quality of financial reporting is unlikely to be fulfilled. The advocates of
Cadbury style audit committee need to be careful not to claim too much.
Redikar and Seth (1995)15
were of the view that firm’s owners should
not expect any single mechanism to govern the company effectively across
time. It is through the proper use of several mechanisms that the owners are
able to govern the company in ways that maximize strategic competitiveness
and increase the financial value of their firm.
Beasley (1996)16
in his empirical study examined the link between
financial statement fraud and board of director compensation. He found that a
higher proportion of outside directors on the board reduced the likelihood of
fraud. The results support the view that boards with more outside directors
provide more effective corporate governance.
li
Bogert (1996)17
in his study observed that institutional owners because
of their prominent ownership position are a powerful governance mechanism.
Delorme (1996)18
suggested that corporate governance can be
improved by adoption of strategic planning process, communication policy,
integration of company’s internal information, management system and
identification of risks including those arising out of the use of derivative
instruments.
Rao and Lee Sing (1996)19
investigated that a good governance
practices entail active participation of shareholders in the direct and indirect
management of corporation through the board of directors and an arrangement
of productive checks and balances among shareholders, board of directors and
management of corporations.
Byrne (1997)20
observed that large-block shareholders (who own at
least five per cent of a company’s issued shares) are increasingly active in
their demands that companies adopt effective governance mechanisms to
control the decisions of their managerial agents.
Catalyst (1997)21
a non-profit group that studies women in business
noted that among the Fortune 500, 84 per cent have at least one woman on
their board. However, the increase in 1997 was only three per cent, following
jumps of nine per cent and ‘seven per cent the previous two years, thus,
among Fortune 500 firms the rate of inclusion of women in business is
slowing.
Coulson (1997)22
in his study stressed that training and changing
composition of a board to be most common means of improving the collective
effectiveness of directors. The highest training priority was the development
lii
of strategic awareness and business understanding. The efforts will develop a
strong corporate governance system in the organization.
Fernando (1997)23
in his study stressed that in India, corporate
governance has acquired a new urgency due to changing profiles of corporate
ownerships, preferential allotment of shares to promoters, increasing inflow of
foreign capital and deliberate dismantling of control mechanism with
economic liberalization that had hitherto provided protective cover to even
poorly managed corporate.
Grover, Byrne and Melcher (1997)24
were of the view that if the
board makes the wrong decision in selecting the firm’s strategic leader, the
CEO, the whole firm as well as its share holders suffers. On the other hand,
solid; governance procedures can create credibility for the firm and its
strategy.
Kroll, Wright, Toombsand Leavell (1997)25
suggested that a well-
functioning corporate governance and control system could result in a
competitive advantage for an individual firm.
Lubin (1997)26
as of the view that CEOs that are on too many boards
have been criticized and a number of CEOs are deciding to decline to be
outside directors on other firm’s boards. Instead of serving on other firm’s
boards, top-level managers increasingly desire spend time improving their
own firm’s performance. Improved performance reduces the likelihood that a
firm will become a takeover candidate.
Mejia and Wiseman (1997)27
in their study indicated that the purpose
of executive compensation is to improve the alignment of management and
shareholder interests and reward managers for efforts rendered.
liii
Shleifer and Vishny (1997)28
in their study observed that the purpose
of corporate governance is to ensure that investors (suppliers of finance,
shareholders or creditors) get a return on their money. They also stated that a
firm has many stakeholders other than shareholder (e.g. employees, creditors,
customers, suppliers, public and the Government) whose welfare must be
taken into account.
Srikant (1997)29
in his work analyzed that corporate governance
ensures how effectively the board of directors and management are
discharging their functions in building and satisfying shareholder’s
confidence.
Westphal and Zajac (1997)30
in their study found that board of
directors is an important governance mechanism in United States
Corporations and thus the board’s role is rapidly evolving as a major strategic
force in U.S. business firms.
Business today – aims (1997)31
in their survey of the best board of
directors among the country’s 100 most valuable corporates on the basis of
four parameters of corporate governance, i.e. accountability, transparency,
quality and independence found that the best five boards in India are
Hindustan Lever Limited, Telco Limited, Bajaj Auto Limited, HDFC Limited
and Larsen & Toubro Limited.
Balasubramanian (1998)32
in his study stated that there is no
guarantee that implementing good governance rules and following best
practices in business will completely eliminate undesirable corporate practices
or substantially protect shareholder interest. Rather it is internal audit function
that contributes towards better governance of the enterprise. He also found
that independence of board of directors could be compromised by a number of
liv
factors like their allegiance, loyalty and friendship with the management
group or even lack of time to devote to company affairs.
Boyd (1998)33
observed that executive compensation is a governance
mechanism that seeks to align manager’s and owner’s interests through salary,
bonuses and long-term incentive compensation such as stock options. Stock
options are a mechanisms used to link executive’s performance to the
performance of their company’s stock.
Cadbury (1998)34
in his work emphasized that there is an increasing
need among growing companies to tap international capital markets for funds.
As they compete to attract investment and raise capital world wide, high
standard of governance is demanded by investors. Hence corporate
governance is emerging as an important issue in the international business.
Dadiseth (1998)35
made a thoughtful attempt that corporate
governance envisages a set of systems and processes which ensures that a
company is managed to the best interests of all shareholders. In its broader
connotations, corporate governance is like a trusteeship. It is not simply a
matter of creating checks and balances, but creating an outperforming
organization which leads to increasing customer satisfaction and shareholder
value.
Jay A . Conger, David Finegold and Edward E. Lawler III (1998)36
in their study of the performance evaluation has suggested that the changing
roles and rewards for corporate directors create a compelling reason to review
board performance regularly. As greater attention has focused on corporate
governance, directorships that were once relatively low-paid and essentially
honorary positions have become demanding and well compensated. If the
right evaluation process is in place, self- evaluation need not be self-serving
lv
evaluation. They referred to the survey of directors at Fortune 1000 companies
conducted in 1996 by Korn/Ferry International which indicated that even
though 70% of the largest US companies have adopted a formal process for
evaluating their CEOs, only one quarter evaluate their board’s performance.
Evaluations of individual directors are even rarer and more controversial,
occurring in just 16% of the companies surveyed. They also conducted
interviews and gathered written surveys from CEOs and board members at a
dozen companies that are aggressive pioneers in performing and applying
boardroom appraisals. Their research has allowed them to develop a set of
best practices that represent a composite of the most effective techniques used
by all these organizations. Their results finally covered mainly on two broad
areas what the board does and how the board does an effective job.
Kathuria and Dash (1999)37
in their empirical study found that the
size of the board plays an important role in influencing the financial
performance of corporations. They concluded that the performance improves
if the board size increases, but the contribution of an additional board member
decreases as the size of the board increases. In other words, corporations
which already have a high average board size do not gain much if an
additional board member joins.
William R. Emmons and Frank A. Schmid (1999)38
had found that
National corporate-governance traditions are distinctive, deeply rooted, and
difficult to change. Recent research points to a country’s legal traditions and
its stage of economic development as important determinants of corporate
governance institutions. Common-law countries tend to provide more explicit
investor protections than civil – law countries. Richer countries tend to
enforce corporate laws more strictly. Broader and deeper financial markets
emerge in the presence of strong investor protections, fostering more outside
financing and better corporate financial performance. Corporate governance
lvi
systems a1so influence resident firms capital structures and ownership
structures. However, a broader perspective on corporate performance suggests
that no country’s system of corporate governance is without shortcomings.
CIMA (2000)39
in a survey of European corporate governance
practices acknowledged that Continental model (with two boards supervisory
and management) seems to prioritize the company’s role in society over the
generation of increased returns for shareholders; when compared with the
Anglo-American (unitary board) model.
Xavier Vives (2000)40
has studied that different systems of corporate
governance have different impacts on the degree of competition in the
economy. The picture that emerges of the role and effectiveness of corporate
governance is mixed from both the theoretical and the empirical perspective.
However, taking for granted that competition is the main driving force
towards efficiency, it does not follow that corporate governance does not
matter. In relation or bank-based systems, external control is weak and webs
of cross-participations may weaken product market competition. There has
been limited evidence of the effectiveness of internal and external
mechanisms of governance, managers seem to get their way most of the time,
non-profit institutions fare well in competition with for - profit firms, and
other factors like competition in the product market, seem to be more
important for economic performance.
Franklin Allen and Douglas Gale (2000)41
have observed that the
agency approach to corporate governance is somewhat inadequate because it
ignores that, in many instance managers are not only responsible to outside
investors but other stakeholders, such as employees may be legally entitled to
exert control on the firm’s policy. Also the separation of ownership and
control is a much less frequent phenomenon and top managers are rather
lvii
entrepreneurial. They have also concluded that the existing mechanisms for
corporate governance, whether based on external market discipline or internal
monitoring are not particularly effective because, there do not seem to be
comparable cross-country differences in the way firms operate or in their
profitability. Moreover, competition in product and input markets is the main
factor in ensuring efficient resource allocation since, in the absence of good
information about the optimal management strategy, where standard
governance mechanisms are ineffective almost by definition; a Darwinian
Process of competition may ser e to select the best management teams. The
reason is that firms run by opportunistic or plainly incompetent managers will
not be able to survive in a competitive environment. Hence according to the
authors, corporate governance system appears to be defined as the set of
institutions that guide the firm’s policies and strategies to maximize
shareholder’s value. As per this definition, the main function of a corporate
governance system is to improve exante efficiency by providing adequate
incentives for value enhancing investments.
Simon Johnson, Peter Boone, Alasdair Breach and Eric Friedman
(2000)42
presented evidence that the weakness of legal institutions for
corporate governance intensified the depreciations and stock market declines
in the Asian crisis. Furthermore, Johnson and others believed on the
importance of the law, i.e. countries with more investor protection have better
developed financial markets and more growth. The determinants of law are
complex, but the origin of the legal system is an important factor. Legal
reform works and the change may come slowly which may have setbacks, but
a sustained effort to improve investor protection definitely payoff.
Martin Hellwig (2000)43
has called for a reassessment of the
significance of corporate finance for corporate control and for a reorientation
of the theory of corporate governance through his paper on economics and
lviii
politics of corporate governance in Europe. He is skeptical about the top-down
legal and corporate governance reform and for a good reason. The first order
effect of such a reform is to redistribute wealth from the controlling families
to minority shareholders and creditors of public firms, since the private
benefits of control are likely to diminish, Not surprisingly, the controlling
shareholders do not welcome such reforms and hence their political prospects
are relatively dim in contrast, principal beneficiaries of corporate governance
reforms, who are the owners of private companies that are thinking of going
public as well as the would be entrepreneurs, do not have nearly as much
political influence as the controlling shareholders of the major public firms
and hence their voice is nowhere near as loud. There are of course other ways
for firms to improve their corporate governance, and thus to enhance their
access to external finance. Among the most important strategies is to opt into
a legal regime more supportive of outside investors, for example by listing the
stock in New York or London. However, an alternative way to opt into a
better legal regime is to be acquired by a company operating in such a regime
or by a company that has better access to external finance.
Syamal Ghosh (2000)44
has observed that the styles of corporate
governance vary widely across countries for understandable reasons. The
uniqueness of history, cultural and institutional factors and the habits and
attitudes of the people influence their approach towards corporate governance.
According to him, since the attainment of independence in India, the style of
corporate governance has been influenced by the Government, the regulatory
agencies, the major providers of private capital in the country and legacies
from the colonial past.
T.P. Ghosh (2000)45
has discussed the three pillars of Corporate
Governance, i.e. the nomination committee, the remuneration committee and
the audit committees and their role or absence in the SEBI guidelines. He has
lix
concluded that the corporate governance code in India should have these
committees in place which are also relevant from the aspect of decision-
making by the shareholders and other interest groups. The proposition of
compliance certificate in India although takes care of ensuring the pursuance
of desired governance policy, disclosure may help the shareholders to get
some more additional information. Thus it helps to improve transparency in
the governance.
Dr. Surendar Kumar (2000)46
has pointed out that, although there are
various attributes of corporate governance, it must he appreciated that the
subject is mainly based on the question of ethics which is the core of good
corporate governance in the day to day management functions. He has dealt
with the analysis of cases studies, illustrating the ethical dilemmas faced in
real life situations and the importance of values and ethics in all decisions and
actions, According to him, the overall scenario calls for setting up
ofbehaviora1 standards ably supported by structural system under the full
glare of public accountability.
Centre for Monitoring Indian Economy (2001)47
in its survey of
major unlisted companies observed that unlisted companies report poor profit
margins, pay lower salaries and wages, and lower dividends. It is also being
argued that due to considerably higher level of corporate governance, listed
companies are better performers and hence have greater access to additional
capital. CMIE has strongly suggested that there is a necessity to have good
corporate governance in sizeable unlisted companies for the protection of the
interests of other stakeholders if not the shareholders.
Kluth (2001)48
in his survey of the corporate governance practices of
South-East Asia, America and South Korean business found that corporate
culture in the Singapore and Hong Kong is very strong. While in the absence
lx
of sound regulations South Korea and Indonesia’s position is worst. On the
issue of transparency and investor care China performed badly but the
Singapore and Hong Kong were very much conscious about such issues and
were at the top. This survey also found that company’s directors not simply
comply with the rules but try to do better realizing that best practice is a
competitive advantage.
Mehra (2001)49
in his study mentioned that according to a millennium
survey of 25000 people across 23 countries and six continents for the year
2000, 56 per cent said that the brand equity of the company depended on its
corporate citizenship while 40 per cent said it was because of quality. Only 34
per cent said it was because of their management practices.
Misra (2001)50
in his study found that in case of unlisted companies,
firm value may be dependent on the nature and extent of family influence.
Undoubtedly, there is a unique corporate governance scenario under which
family control may be more effective.
Ray (2001)51
in his study found that though many reputed companies
are not listed in any stock exchange yet they are performing well on the issue
of corporate governance. He also observed that, unlisted companies have been
spared and kept away from observing the code of corporate governance. But
there are many large family-run multinationals and public sector unlisted
companies which are very well known and have large stakeholders are
adopting the codes and following the good corporate governance practices.
Schoormàn and Donaldson (2001)52
in their study suggested that the
mechanisms such as ownership concentration, board of directors, executive
compensation, and mu1ti divisional organizational structure and market for
corporate control have the potential to influence positively the governance of
lxi
the modern companies. This evidence is important because the development
of the modern companies have placed significant responsibility and authority
in the hands of top-level managers.
Barua (2002)53
in his study stated that there is no model that would
guarantee ethical corporate behavior. He stated that not only improvements in
disclosure norms, changing of the composition of boards by including non-
executive directors and setting up of audit committees would lead to increase
in the level of corporate governance but as long as social atmosphere in which
the Indian corporate sector operates remains corrupt, there is little hope for
significant improvement in the behavior of corporate sector in India. Till then
ethics in business and good corporate governance must remain the dream of
an inveterate optimist.
Bazerman, Loewenstein and Moore (2002)54
in their study found that
some time corporate governance system does not work efficiently because of
the often subjective nature of accounting and the tight relationships between
accounting firms and their clients. Even the most honest and meticulous
auditors can unintentionally distort the numbers in ways that mask a
company’s true financial status thereby misleading investors, regulators and
management. They concluded that the real problem is not a conscious
corruption. It is unconscious bias.
Business Standard (2002)
55 quoted that a report has been prepared for
an investors’ forum in Malaysia. The report has examined and ranked 495
companies in 25 markets on their corporate governance scores. The report
found that better governed companies have higher return on equity (ROE),
higher economic value added and higher price to book premium.
lxii
Chakarawati (2002)56
in his study found that until the issue of
relationship between company and its auditors, conflict of interest between the
rating agencies and companies, banks acting as lenders and their work as
investment bankers are properly addressed, the efficiency of corporate
governance across the world can not be enhanced.
Chaudhary (2002)57
in his study stated that in order to implement
good governance practices “transparency and honesty” elements should be
involved in business. He stated that every policy should be cleared enough to
those who would be affected by the decision system. If it is not cleared to the
concerned persons being affected, the affected persons may consider the
action as imperfect, dishonest and biased thereby creating dissatisfaction
among the employees of different groups, sectors, religions, etc.
Chikodikar (2002)58
in his study found that those companies which
practice high standard of ethics and. corporate governance have number of
benefits in the form of increased shareholder value and also rewarded with
higher valuation by investors.
Fleming (2002)59
in his study observed that not only the external’
market forces but also the internal constitution of the company has a lot of
impact on the standing of a company in the eyes of the investors. When a new
high-flier Chief Executive Officer is appointed in company, the share prices
moves up. He pointed out that in the corporate governance system
shareholders and other market players are considering the composition of the
board of directors as a key parameter in judging the value and performance of
the company.
Maheshwari (2002)60
in his study stated that there are many loopholes
in the India’s Company Act, 1956, that’s why the system of corporate
lxiii
governance is not working efficiently. He found that instead of providing
protection to shareholders, making directors more responsible and looking
into the optimum structure of board, companies are concerned with board
room battles, takeover traumas, etc. He suggested that transparency in the
system, sound regulations, disclosures of financial statements and
accountability of the board of directors are to be considered for good
governance practices.
Mckinsey (2002)61
in its survey of 30 leading family-owned businesses
found that most of the family-owned businesses are facing threat because of
conflict of interests among members of families. Such businesses are moving
towards third generation ownership. However, their counterparts in the west
had been wiser in this regard and had introduced best practices. The study also
depicts that only seven per cent of the family-owned businesses will survive
beyond the third generation. It also stressed the importance of establishing a
clear and valid role for the family in a business, equal treatment of
professionals and remuneration of family members. The report suggested that
family owned businesses must introduce best practices and lay down clear
rules on governance and leadership.
Pai (2002)62
in his study elucidated that the quarterly results model
believe that markets should be kept informed about corporate performance on
an ongoing basis rather than at the end of the year. He stated that corporate
that had shown rosy quarter - end reports got rewarded sharp increase in
market cap and vice versa.
Panchalj and Baid (2002)63
in their study stated that there has been
considerable acceptance of principal of shareholder wealth. Maximization by
companies in actual practices. It implies that maximizing the shareholders’
wealth will lead to optimizing the interests of other stakeholders. There have
lxiv
been evidences where companies have done well not only by maximizing
wealth of their shareholders but by optimizing the interest of stakeholders. For
lasting success of the business, its top priority need not be its shareholders. In
fact, precedence of shareholders’ interests (who are generally interested in
financial terms) over other stakeholders may adversely affect the long-term
survival and success of the business. It requires optimization of interest of
various groups of stakeholders over lop-sided maximization of one class of
stakeholders. So companies have to strike a balance among the interests of the
various stakeholders.
Prasuna (2002)64
in his study found that companies are loosing their
credibility due to not following good governance practices. He concluded that
in order to restore lost credibility and to win shareholder confidence
independent board of directors, audit committees and accountability of Chief
Executive Officer should be considered.
Saha, Y., and Bandyopadhya (2002)65
in their empirical survey of
corporate governance of 350 largest companies across the globe has found
that two Indian companies Infosys Technologies Limited and Software
Solution Integration United received the highest rating in corporate
governance as they have very good system of transparency and disclosure of
the information in their companies. They also took into account information
available in the annual reports of the company.
Sonnenfeld (2002)66
in his empirical study found that the highest
performing companies’ have extremely contentious boards that regard dissent
as an obligation and treat no subject as undiscussàble. He stated that good
board of governance can’t be legislated, but it can be built over time. Not only
good governance guidelines such as setting up of audit committees,
importance of independent directors and ethical guidelines have helped
lxv
companies avoid problems related to boards but also if a board is to fulfill its
mission it must become a robust team.
Subrahrnanyam and Merril (2002)67
in their study stated that in
India, Infosys Limited is setting up benchmark for other companies for
corporate governance practices. In its initiatives it is providing a methodology
for improving transparency and providing the capital markets with
information needed to accurately access future value. Company has adopted
the unique globally recognized Value Reporting model that provides both
historical and predictive indicators of shareholder value.
Yamaoka (2002)68
in its comparative study of Japanese and Korean
banks found that different corporate governance approaches are followed by
their banking systems. While the Korean Government has placed a high
priority on increasing shareholder value in banks, the Japanese Government
appears to be less focused on this issue. He also stated that the Korean banks
have at least half of their boards constituting outside directors, while outside
directors have a minimal presence in Japanese banks.
Marco Becht, Patrick Bolton, Ailsa Roell (2002)69
in their research
working paper have revealed that, Corporate governance is concerned with the
resolution of collective action problems among dispersed investors and the
reconciliation of conflicts of interest between various corporate claimholders.
In their survey they reviewed the theoretical and empirical research on the
main mechanisms of corporate control, discussed the main legal and
regulatory institutions in different countries, and examined the comparative
corporate governance literature. Further, a fundamental dilemma of corporate
governance emerges from this Overview: large shareholder intervention needs
to be regulated to guarantee better small investor protection; but this may
lxvi
increase managerial discretion and scope for abuse. However, alternative
methods of limiting abuse have yet to be proven effective.
Agarwal (2003)70
in his study found that corporate governance leads to
improved long-term performance and important criteria for investment
decisions in other countries. India has been excluded from any investment
being made due to inadequate corporate governance practices. He stressed that
with increasing globalization and international competition it is necessary for
Indian corporations to adopt good corporate governance in order to tap global
financial markets.
Bhasa (2003)71
in his study of shareholder theory found that now a
days companies are focusing only on shareholder wealth maximization.
Companies are taking care of only shareholders while other stakeholders are
ignored. He suggested that all parties who are either directly or indirectly
affected by the corporation’s operations are to be compensated either in
pecuniary or non-pecuniary terms. This line of thought led to the argument
that corporations must attempt to maximize stakeholders’ interests instead of
plainly focusing on shareholders’ benefits.
Bujaki and McConomy (2003)72
in their study of 300 firms listed on
Toronto Stock Exchange (TSE) found that very few firms have fully adopted
the TSE corporate governance guidelines and the extent of disclosure on
corporate governance varies widely among these firms. They further found
that the annual report is the preferred disclosure medium for those firms
planning a stock offering. The extent of disclosure is found to be higher for
more highly leveraged firms, those with a majority of unrelated directors,
firms planning stock offerings and for large firms.
lxvii
Dwivedi (2003)73
in his study found that most of the companies in
India and at the global level are following the corporate governance norms or
code. They are just trying to comply with the code in letter and not in spirit.
He suggested that directors should be made personally liable for corporate
wrongdoings. He further stated that it is high time India Inc. should come out
of the practice of following the law in letter and, strives to raise the standards
of corporate governance to global benchmarks.
Ernest (2003)74
in his study observed that now-a-days company are
blaming only small outside investors for creating problems in corporate
governance. He also cited that the main corporate governance problem is self-
interested management and weak, dispersed shareholders.
Grosfeld and Tressel (2003)75
in their study found that competition
has a positive influence on productivity and that product market competition
may be an effective way of ensuring efficient restructuring and productivity
growth during the transition. However, they also found strong evidence that
the impact of product market competition depends on the ownership structure
of firms considered. They stated that competition has no significant effect on
performance for the firms with ‘poor’ governance; on the contrary, it has a
significant positive effect in the case of firms with ‘good’ corporate
governance.
Gunasingh (2003)76
in his study stated that in order to regulate and
ensure good corporate governance practices in the companies different bodies
are functioning like Securities and Exchange Board of India, Department of
Company Affairs, Stock Exchanges and Professional Bodies. But there is
problem of coordinating all such bodies. So Lie suggested that instead of
different regulating bodies a separate body in India for corporate governance
should be established which would take care of only corporate governance
lxviii
matters. This will help in saving time and financial resources of the
Government.
Helman (2003)77
in his study found that in the public sector it is the
corruption that decides the direction of governance, i.e. it is good or bad. In
his Business Environment and Enterprise Performance Survey he found that
countries with high level of corruption at the different level have less
governance practices while on the other hand countries which have less
corruption in the organizations, the level of governance practices were
reasonable.
Jain (2003)78
in his empirical study observed that family- owned
businesses are increasingly adopting corporate governance practices
voluntarily. He also found that domestic Indian companies are being seen to
have taken the lead. More than 71 per cent business owners have already
tightened internal controls as a safeguard while 25 per cent have appointed
non-executive or independent directors and formalized policies on director’s
pay. The country is much ahead with 46 per cent having formed audit
committees Compared to the global average of 34 per cent. While about .9 per
cent of the Indian companies surveyed expect new corporate governance
regulations to affect their businesses, globally 56 per cent feel likewise.
Khanna (2003)79
in his study found that domestic financial institutions
in India are ineffective monitors where association with foreign institutional
investment provides significant monitoring benefits. Firm performance is
positively correlated with the presence of foreign institutional ownership and
negatively correlated with the presence of domestic institutional ownership.
He also concluded that more transparent groups are more likely to attract
investments.
lxix
Loke (2003)80
in his study of Corporate Governance Practice of Asian
Firms stated that now a days not only small investors but also institutional
investors and international agencies are demanding better corporate
governance. He further stated that rules are important - they form the ‘internal
skeleton’ of the corporate governance. If rules and mechanisms are missing,
corporate governance is likely to be dysfunctional
Mckinsey (2003)81
a research-based company in its Investor Opinion
Survey of 200 institutional investors showed that three-quarters of investors
polled regarded board practices to be as important as financial performance.
The share premium institutional investors are willing to pay for companies
with good corporate governance practices over equivalent companies without
good corporate governance practices range from 18 per cent for companies in
the U.K. to 27 per cent for companies in Indonesia.
Mehra (2003)82
in his study found that 71 per cent of Indian business
owners have already tightened up internal controls of their companies as a
safeguard. In case of India, 39 per cent of independent businesses were
expecting the new corporate governance regulations to impact their
organizations. He further found that Indian businesses along with those in
Mexico, Singapore, and the United States lead in having already formed an
audit committee as another line of defense.
Price Water House Coopers (2003)83
a research survey of different
UK companies revealed that almost of industrial and service sector companies
have nomination committee and where there is such a 61 per cent are chaired
by the company chairman rather than an independent director. Their survey
revea1ed that such companies are also following the recommendations given
by Higgs report on corporate governance.
lxx
Spenger (2003)84
in his empirical study found that today the
companies are violating the shareholder rights in various aspects. He also
elaborated’ the best-known violation techniques of shareholder rights adopted
by the companies from time to time like share dilution, delayed dividend
payments, asset stripping or transfer pricing, disinformation and outright
deception, etc.
Srinivasan (2003)85
in his study stated that the greater the
concentration of power with the Chief Executive Officer, the higher their
influence over crucial decisions. The personal characteristics of the CEO
some times tend to distort decision- making on investments. He also stated
that it would not be right to blame only CEO for the recent corporate scandals.
These problems had arisen due to the failure of governance in boards, which
didn’t exhibit enough independence and the failure of the auditing profession
to separate its audit function from consultancy operations. This led to a
conflict of interest and the consequent loss of auditors’ independence. He
concluded that organizations with active and vigilant boards tend to have
much better and efficient governance.
Thompson and Ting (2003)86
in their empirical study of two South-
East Asian airlines found that segment reporting plays a major role in making
financial statements more useful to investors They stated that segment
disclosures allow investor to conduct an in-depth analysis of a company’s
financial performance and make more meaningful comparisons between
compet1torsspecially those using the same segment categories. Such reporting
plays a key role in improving transparency and the governance of concerned
enterprise.
Sir Adrian Cadbury (2003)87
conveyed that the very essence of
corporate governance is based upon the principles of transparency,
lxxi
accountability, fairness and responsibility and their application is universal
nature. According to him, a code of corporate governance cannot be imported
from outside but, it has to be developed based on the country’s experience.
There cannot he any compulsion on the corporate sector to follow a particular
code. Equilibrium should be struck so that corporate governance is not
achieved at the cost of the growth of the corporate sector. The way they are
put into practice has to be determined by those with responsibility for
implementing them.
Dr. Donna M. Faltin and Frederick W. FaItin (2003)88
have put
forth how six sigma monitoring of the propounded financial quality matrix,
might have prompted inquires well before any fraud actually takes place
which ultimately facilitate better management and restore investor confidence.
They have illustrated the case of the demise of Worldcom, the largest
corporate bankruptcy in U.S. history and suggested that six sigma can address
the issues and provide a uniform disciplined framework for reliably tracking
financial results and corporate governance metrics, when augmented with
techniques from economics, finance and operations management. According
to their experience, the application of the paradigm, i.e. define, measure,
analyze, design and verify (DMADV) is the best way to develop a corporate
financial quality system. Thus, financial quality practices, rooted in Six Sigma
can help define a culture that will respond to these needs, promote legal and
regulatory compliance, facilitate better management and restore investor’s
confidence.
Nick Bradley (2003)89
has advocated the importance of measuring the
corporate governance standards in the present scenario. According to him, the
rating of the corporate governance standards provides an independent
assessment of an entity’s current performance and expectation on its balanced
value creation and corporate governance practices in future. It also indicates
lxxii
the capability of the rated company with respect to wealth creation for all its
stakeholders while adapting sound corporate governance practices. He has,
conspicuously planned out the extensive exercise of rating a corporate for
governance norms through the launch of corporate governance scores by
Standard and Poor’s in evaluating corporate governance practices both at a
country and at a company level. The analysis started an evaluation of
governance issues at the country level by focusing on main areas like, legal
infrastructure, regulation, information infrastructure and market infrastructure.
The second part of the analysis evaluated corporate governance practices at
individual companies using a synthesis of the OECD’s and other international
codes and guidelines of best practices and assigned scores to a company’s
overall practices, focusing on ownership structure, financial stakeholder
relations, financial transparency and information disclosure, and board
structure and process.
Donald J. Johnson (2003)90
has observed that living in a multilateral
network requires rules hut a system based on principles and values makes it
strong. According to him, no doubt rules are needed, especially in this
complex environment, to endeavor to elicit the desired behaviour of corporate
executives. Rules are also needed to provide the means to decide and make
choices and to know what to comply. They are needed to provide rules to have
a list of what is encouraged and prohibited since it conveys a certain order in
the corporate arena. It thus, defines the relationships of the various corporate
actors and stakeholders. Moreover, rules theoretically put everyone on the
same plane but whether everyone follows the rules is another thing.
Ismail Adams (2003)91
has examined the different paradigms of
corporate governance that is the Anglo American model, Japan or Germany
model and the Family Capitalism model. The Anglo- American capital
market-based model emphasizes the maximization of shareholder value. On
lxxiii
the other hand, the Japan or German model is focused on a relationship-based
model that emphasizes the maximization of the interest of a broader group of
shareholders. For family business or family capitalism, family values appear
to have significant influence on the outcomes of family capitalism and
therefore corporate governance. According to him, the corporate governance
of large corporations following these paradigms in a way is entrusted to the
CEOs and other professional managers. Thus, the monitoring of corporate
governance is focused on the management running the business. Moreover,
Adams emphasized that corporate governance has a major indirect effect on
the socio-economic-growth-development nexus of a country, because finance
and investment decisions impact either positively or negatively on the
development process and thus the quality o life of people. He then
recommends that corporate governance should go beyond the functional
framework of Focusing on rule-based environment or the quantitative aspects
of governance and towards important social goals such as poverty alleviation,
improved quality of life, enhanced opportunities for better education, health
and more.
Lynn McGregor (2003)92
has recognized the key human components
of corporate governance as, knowledge of the key business issues, the key
people and the capacity of the company to deliver sound results with no
unpleasant surprises; The right composition, balance of power and succession
planning; High level decision making, including the ability to deal with
complex information; and Effective working relationships between the hoard,
fund managers, other shareholders and owners, management and other
stakeholders.
According to her, while risk management is an important element of
good board performance, the key purpose is to increase shareholder value,
placing the locus on gaining competitive advantage by being better at wealth
lxxiv
creation. This calls for a broader understanding of the meaning of corporate
governance that is, showing direct correlation between a company’s
exponential growth and active recognition of the human factors in business
leadership.
Dr. P.L. Sanjeeva Reddy (2003)93
has explained the link between the
governance principles to Kautilya’s Arthashastra and goes on to draw
taxonomy of legislative framework and growth of corporate reforms in the
country. According to him, there is no inherent contradiction between
improving competitive context and making a sincere commitment to bettering
society. If systematically pursued in a way that maximizes the value created,
context focused philanthropy can offer companies a new set of competitive
tools that well justifies the investment of resources. At the same time, it can
unlock a vastly more powerful way to make the world a better place.
V.K. Sareen and Dr. Subhas Chander (2003)94
have examined the
corporate voluntary disclosure practices of the private sector in Indian
studying on both the item-wise and corporate-wise disclosure of the selected
50 companies. He concluded that the most vital document containing
comprehensive information for the users which have both non-financial
statistical and other information as per the manner that suits the requirements
of the corporate sector. However, the style of presentation and the method of
accounting treatment and reporting vary and hence there is a need to improve
the corporate disclosure laying emphasis on corporate governance by
following the principles of accounting standards and the requirements of
companies Act and other relevant Acts, to be in consonance with the
international practices
Punit K. Abrol and Rakesh Kumar Gupta (2003)95
analyzed the
need of corporate governance through the separate laws so as to build up the
lxxv
confidence of the domestic as well as the international community. They also
highlighted the need of various types of information which could help the
investor to invest in a particular company. They concluded that the needs of
the community require to be translated into corporate governance by the
professionals of various national and international bodies. They have also
examined the corporate philosophy of a number of companies through the
study of their annual reports.
Dr. Neelam Jani (2003)96
observed that in the recent past the Indian
economy had witnessed many structural changes through the rules governing
the Indian industry, in order to bring in efficiency and competitiveness which
has compelled the Indian companies not to ignore the adoption of best
corporate practices. Further, she has highlighted the significance of
transparency in financial reporting to establish the quality of good corporate
governance, as in Indian companies the investors in India and abroad are
demanding greater disclosures and transparency in major decisions for better
corporate values. She had examined the legal requirements and guidelines of
regulatory bodies regarding the corporate disclosures and recommendations of
working group on corporate governance with the actual practices of corporate
governance in the Indian corporate sector.
Girish Jaiswal (2003)97
has emphasized on the increased concern for
corporate governance, all over the world. He stressed on the composition and
role of board of directors in proper direction and control of the company. He
is of the opinion that in the changing global business environment only those
companies are going to survive which have renewed focus on social
responsibility, responsible board of directors and transparency and
accountability.
lxxvi
Anil Arora and Madan M. Singh (2003)98
have explained the factors
influencing the quality of governance such as integrity of the management,
ability of the board, adequacy of the process, commitment level of individual
hoard members, quality of corporate reporting and the participation of
stakeholders in the management, by taking the case study of Ranbaxy Ltd He
has also discussed the concept, structure and process of corporate governance
and the importance of the constitution of the four committees as per the
corporate governance code adopted by Ranbaxy Ltd.
V.K. Pandey and Rajeev Prabhakar (2003)99
has traced the
emergence of the concept of corporate governance as a growing role in the
market-oriented economy in the later part of the 20th
century. According to
them, this has led to the spread of capitalism, globalization, liberalization, and
privatization with demanding efficiency, corporate culture, and model code of
conduct and business ethics for the very survival of the corporate world. They
are of the opinion that the success of corporate governance is based on
complete transparency and arms length relationship between owners and
managers.
V.M. Budhiraja (2003)100
has described the evolution of the concept
of corporate governance in the light of increased corporatization and growing
stock markets. He has stressed the procedural aspect of the corporate
governance in complying with the social responsibility and accounting
standards. He is of the opinion that the board of directors should play the role
of visionary in terms of implementation of strategies of the company and
ensuring that the board members do not have direct interest in any of the
business contracts, etc.
Bikram Hundal and Suresh Seth (2003) 101
has elaborated the
benefits accruing due to good corporate governance in an environment of
lxxvii
trust, ethics, moral values and confidence. They have attempted to explain the
fundamental objective of the Desirable Code of Conduct in ensuring the
commitment of the board in managing the company in a transparent manner
for maximizing long term shareholder value. This code seeks to include the
board of directors, its composition, role of non-executive directors, and code
of conduct for directors, audit committee, disclosure of financial and other
relevant information for improving the quality of corporate governance.
Vibha Mahajan (2003) 102
holds the opinion that a social institution
including a corporate entity derives its legitimacy from its ability and desire to
fulfill social needs and hence accountable to the members of the society. The
recurring financial crises and the scams that rocked the nation in the recent
past call for a sharper focus on corporate governance. Therefore, the only way
the interest of the public at large could be protected is, by building the
firewalls in the form of practices of good corporate governance. This has been
advocated by the growing role of the regulators such as SEBI and Stock
Exchanges in putting emphasis on ethics, transparency and voluntary
disclosures.
Prabhdeep Singh Sandhu and Manjit Kaur Sandhu (2003)103
have
examined the accountability of management to shareholders and role of
corporate governance in creating value for shareholders by taking the example
of UTI and Enron fiascos. They have also taken up key issues in corporate
governance guidelines and codes such as board responsibilities, board
compositions board committees and disclosure norms. In this regard, they
have examined the corporate governance codes and guidelines in the Indian
context and suggested that the best results would be achieved when the
companies begin to treat the code as their way life.
lxxviii
Karamjit Singh (2003)104
has hold a firm opinion that there are no
successful systems of corporate governance, past or present, without
committed and knowledgeable long-term shareholders and accountability of
the management. He suggested that both for reasons of power legitimacy and
business competitiveness a real governance system for large corporations are
desirable. Further, nothing meaningful will occur, unless the parties most
affected realize that it is in their self-interest for the changes to take place
because ultimately, it is the corporate governance that is likely to affect the
value of the company in the market.
Prof. M.R. Khurana (2003)105
has examined some of the issues
pertaining to the theme of corporate governance in India and seeks to identify
issue, which need to be considered in improving the corporate governance. He
argues that the national strategy must encompass measures to enforce the
system of accountability to the shareholders, strengthening of the democratic
process and strengthening the media to ensure public awareness, undertaking
the regular policy reviews and effective corporate leadership. According to
him, accountability, transparency, efficiency and discipline are the important
ingredients which will go a long way in building and promoting trust of the
shareholders in the corporate world. Hence, in this regard, a well planned
synchronization is necessary between various factors underlying corporate
governance together with complementary institutions providing enforcement.
Dr. Paramjit Kaur (2003)106
has examined the corporate governance
practices in India and abroad and the impact of Globalization on the
significance of the corporate governance for the long- term corporate
existence. According to her, risks, protection, insider trading and transparency
are the key constituents of corporate governance which are important
considering the enhanced role of shareholders, board of directors and auditors.
lxxix
Dr. Harpeet Singh (2003) 107
has discussed the cases of the vanishing
companies and the growing relevance of the concept of corporate governance
in regard to the corporate responsibility of the promoters and directors of such
companies. He also discussed certain peculiarities in the Indian corporate
governance such as influence of the ascribed authority, effect of education (as
a blend of scientific approach and Indian values), good traditions, belief in
dignity of labour and commitment to the purpose.
A.K. Vashisht, Puja Gaur and Liaqat Ali (2003)108
have stated that
corporate governance stipulates the accountability, control and reporting
functions of board of directors and encompasses the relationship among the
various participants in determining the direction and the performance of the
corporation. They have observed in case of the top performers in Indian
corporate sector, i.e. Reliance, L&T and HLL that, the composition of the
board of directors and the role of chairman call for setting up of behavioral
standards, ably supported and protected by structural system under the full
glare of public responsibility.
Vibha Sinha (2003)109
has equated the terms satisfactory accounting
and disclosure with corporate governance. She has emphasized that proper
working and appropriate board structure are the keys to good corporate
governance apart from their fundamental functions in regard to ensuring
transparency, accountability, fairness and responsibility. She measures the
efficiency of board in terms of monitoring company’s performance against its
objectives. Finally, she has strongly stressed the idea of corporate governance
rating to improve the standard of corporate governance in India.
R. Rajagopalan (2003)110
has felt that, on core corporate issues like
governance imperatives, the perspective of corporate managers in India are
not sufficiently articulated. The reason could be that there is long-standing
lxxx
organized body of corporate directors and executives in India, as in developed
countries. Such bodies are only now evolving in our country. He has basically
focused on two areas, i.e. firstly, the role of the independent directors who
hold the key for ensuring good governance in a corporate organization, are in
a position to check and stop the corporate misdemeanors in the initial stages
of happening; and secondly, the other area of concern is the short-term
approach of corporate managements leading to manipulations, for deriving the
habit of attaining the short-term success, ultimately impairing the long-term
health of the organization.
Anil Kumar Angrish (2003)111
stated that corporate governance is a
set of systems and processes which ensures that a company is managed to the
best interests of all stakeholders. The set of systems that aid the task of
corporate governance, which include certain structural and organisational
aspects and the process vacillating corporate governance that embrace how
things are done within such structure and organizational systems. He
examined the ways through which disclosure norms that are the part of the
control mechanism, keep a tab on corporate sector. He has also elaborated the
various provisions contained in various legislative pieces having a bearing on
corporate governance.
Daisy Chauhan and S.P. Chauhan (2003)112
examined that how the
quality of corporate governance could shape the growth and the future of any
capital market and thereby the economy. According to his study, sound
corporate governance is possible in situations of total transparency, integrity
and accountability of the management while otherwise it can create great
liability for both individual companies and society. Thus, he concluded that
good corporate governance is state of mind and originates from the core
values and needs that is to be institutionalized at all levels of the organization
making it a necessity and not a choice for the Indian economy.
lxxxi
Dr. Madhav Mehra (2004) 113
in his keynote address at the ASEAN
Round Table 2004 organized by Singapore’s Institute of South East Asian
Studies stated that, “Independent directors are the cornerstones of corporate
governance. But excessive remunerations paid to them have made a mockery
of their independence. Analyses of 2004 compensation data showed
independent directors of top 200 companies are being paid £97000 for barely
7 days work in a year.” Moreover, according to him, there are a lot of lessons
for developing and emerging economies like India in the way corporate
governance has been practiced in the west. While these markets are highly
sophisticated, their governance systems are far from satisfactory. They cannot
serve as role models for Asian and African economies but their scandals such
as Enron, Anderson, Worldcom, Parmalat, Scandia, Vivendi, Equitable Life,
Computer Associates, Ahold and Shell offer great lessons.
Arif Khurshed, Susanne Espenlaub & Marc Goergen (2004) 114
have observed that, in the field of corporate governance, the study of lock-in
agreements in initial public offerings (IPO) has recently started to attract a lot
of academic attention. IPO’s are usually characterized by uncertainty, agency
conflicts and sometimes big changes in corporate control structures. Lock-in
agreements can be seen as one of the tools that can help reduce agency
problems since they lead to an alignment of the interests of the insiders with
that of the minority shareholders. They further help to practice good corporate
governance since they reduce the chance of informed insiders taking
advantage of their private information, thus allowing more time for small
investors to resolve the uncertainty in the firm value without the adverse effect
of insider selling.
Jane Fiona Cumming (2004)115
has hold the opinion that, the leading
companies recognize the importance of sophisticated (formal and informal)
networks in the planning and delivery of appealing business solutions; and
lxxxii
indeed, many multi- stakeholder partnerships may have unexpected and
remarkable consequences, possessing the potential to transform the vision and
strategy of the organization. Innovation in corporate governance will become
an essential component in the delivery of sustainable business concept
innovation. Corporate governance procedures are critical to the generation and
ongoing viability of the innovation. Key elements include:
a) Board training and development processes that generate high levels of
awareness and understanding of critical global issues and their potential
impact on the organization;
b) Risk management procedures that enable the board to identify strategic
opportunities as well as recognize critical risks;
c) Board structures that ensure stakeholder perspectives on company
activities and performance are integral to the business decision-making
process;
d) Forward-looking approaches to the assurance of financial and non-
financial information, addressing corporate capacity to handle complex
global issues;
e) Disclosure and transparency processes that facilitate more effective
relationships with stakeholders, and hence support organizational
learning and innovation.
Dr. Giovanni D’Orio and Dr. Rosetta Lombardo (2004)116
has
observed that rules and norms of corporate governance are important
components of the framework for successful market economies and a source
of competitive advantage for emerging economies. But excessive attention to
rules and financial incentives can have the wrong effect of sending a signal of
lxxxiii
a competitive game rather than’ a cooperative one to all the actors of a
corporate enterprise. The success of a corporation depends almost completely
on trust being placed in corporate directors and officers and, obviously, on the
trustworthiness of those directors and officers. If people trust each other in a
perfect way, norms of corporate governance are useless. Instead, the recent
stories of lack of trustworthy behaviour have shown the weakness of many
common law systems of corporate governance. They have concluded that, in
economics, the best way to cope with the concept of system of values, system
of rules, culture or any factor which structures the economic environment is to
understand it as a system of norms (institutions) of democracy and capitalism
are to work, they must coexist with certain pre-modern cultural habits that
ensures their proper functioning.
Lynn McGregor (2004)117
has observed, based on over twenty years
experience of working with boards and executive committees, how widely
diverse leaders succeed in building and maintaining competitive advantage.
As per her observation, every winning team she worked with was totally
committed to winning. Also present is an inspirational vision and sense of
shared purpose, challenging goats and everyone pledged to do their best.
When the team is winning, there is a buzz of heightened energy that fires the
individual and team to express all the knowledge, experience and skills at
their command. She thus concluded that, governance is a powerful tool for
encouraging healthy competitive performance because; a key role for the
board is to promote the executive’s ability to create wealth. To neglect this is
to forget that the purpose of a company is to serve the interests of
shareholders, employees and community in the best possible manner.
Stephen M. Ruckman ( 2004)118
has examined that, just having access
to a company’s financial report is not enough; unintelligible reports can easily
be mistaken for misleading reports. Thus, improving board transparency
lxxxiv
means both making board activities more transparent and communicating
them in a transparent, intelligible manner. By taking these steps, corporate
boards will be able to help their shareholders and stakeholders get the message
that, their globalizing operations are not necessarily sources of deception.
Likewise, shareholders and stakeholders will be able to help hoard members
get the message that they are accountable for their actions, and that they
would do well to listen to those affected by their company’s participation in
economic globalization. He concluded that, poor communication fuels distrust
and discontent with corporate boards. Trusted communication, however,
ensures trusted hoards.
Janis Sarra (2004)119
has concluded in her paper that while more
empirical study is necessary before definitive conclusions can be drawn
regarding indicia of effective stewardship of corporations across different
systems, there are at least four key indicia that are signs of effective
governance across diverse regimes: independent oversight, strategic planning,
effective monitoring and risk assessment, and the relational aspects of
governance. However, how they are applied and the benchmarks against
which they are measured vary considerably, given the regulatory and
normative framework in which corporations operate. The governance debate
has resulted in some convergence towards a conceptual understanding of
effective corporate governance as necessary to enhancing corporate
performance, effectively monitoring activities of managers, and protecting
shareholder rights. Finally, governance of the corporation includes the
structure by which corporate decisions are made such that capital can be
raised cost-effectively, assets are utilized in efficient generation of wealth, and
corporate officers are accountable to those investing in the firm in a manner
that controls agency costs. Thus governance is influenced by three key factors:
lxxxv
the regulatory framework, corporate governance norms and the underlying
objectives of corporate activity.
A.M. Ahmadi (2004)120
has stated that law has a three dimensional
impact; it serves as a deterrent as well as a guide, it obliges the administrative
machinery to apply the laws and it imposes a duty on the courts to enforce the
laws. Hence, it is essential to focus on the methods by which effective
implementation of legal and statutory norms can be ensured; because only
then will it strengthen the compliance with norms of good governance.
Statutory and legal norms are merely spokes of a wheel which requires to be
peddled to ensure movement in the right direction. The machinery has to be
kept road-worthy for effective implementation of norms for good governance.
However, corporate governance system must therefore be so designed that it
presents a friendly to those who are to work the process day in and day out.
He concluded that, what legislation can and should do is to lay down a
common framework - the 'form' to ensure standards. The 'substance' will
ultimately determine the credibility and integrity of the process. Substance is
inexorably linked to the mindset and ethical standards of management.
Ashish Makhija (2004) 121
has explained the core of the corporate
governance principles stating that the debate over self-regulation or legislation
in corporate world is quite old now. The Indian corporate scenario would
justify the legislation of corporate practices. The Confederation of Indian
Industries codified the corporate governance practices many year ago but its
compliance was non-existent until and unless the securities and Exchange
Board of India made it mandatory on the recommendation of Kumar
Mangalam Birla Committee. Thus he concluded that, the compliance with
legislated corporate governance practices must be considered as corporate
governance practices at minimum level. What is desired, at the moment, is
change in perception of persons charged with governance. The regulatory
lxxxvi
pressure is indispensable but voluntary compliance to more than minimum is
desirable. The need of the hour is effective and continuous control system
hacked by independent and effective monitoring system.
N.R. Narayana Murthy (2003) 122
has avowed that ethics, however
intangible play a prominent part in a corporate’s performance, if practiced by
heart can prevent the erosion of standards and serve as a yardstick for
measurement of a corporate’s overall progress. According to him, building
trust and confidence requires an environment where there is premium on
transparency, openness, lack of fear, fairness and justice which should he
encouraged by the chief executive officer of the company. Through this,
excellence can be achieved which is not just a product or a process but it is an
attitude that says ‘nothing else will do’.
Dr. P.K. Chakroborthy (2004) 123
has observed that while the primary
responsibility for good corporate governance rests with the board of directors,
the role played by the auditors along with other agencies like Government,
regulators, industry association, chamber of commerce, etc. are equally
important. The auditor should command an acceptance to this role so that the
advantages of good corporate governance can be availed by all concerned.
Pradeep Godbole (2004) 124
observed that Sarbanes Oxley Act (SOX),
2002 has created ripples in corporate governance arena following the recent
corporate scandals hitting America. SOX has received criticism and described
as a knee jerk reaction to corporate scandals in the US rather than a proper,
well thought out plan to propagate good corporate governance. This may
impede its effect to a certain extent, but the fact remains that with its cutting
edge penalties, SOX acts as blessing in disguise and fosters interest in
corporate governance. Efforts are already underway in Europe and rest of the
World to develop laws similar to SOX, 2002.
lxxxvii
James Nelson (2005)125
has observed the Various facts about corporate
governance practices and details how governance practices have evolved over
time, the link between firm performance, CEO characteristics and changes in
corporate governance practices using an unbalanced panel of 1721 US large
firms from 1980 to 1995. According to him, by 1995, the majority of firms
had implemented differing types of charter amendments, poison pills or other
governance provisions that are potentially harmful to shareholders. Most firms
have adopted multiple and even redundant governance provisions.
Shareholders are more likely to approve an increase in the power of the boards
of directors of better performing firms, while the boards of poorly performing
firms are much more likely to initiate governance changes, such as poison
pills, that circumvent shareholder approval. I find no relationship between
CEO age, tenure or compensation and governance changes.
P.K. Banerjea (2005) 126
have concluded in his redefinition concept of
corporate governance in the new millennium by taking into account various
complicated issues on the all-important Corporate Governance and Ethical
issues, they are, Business Model has changed a lot, and keeping with this,
composition of board should change by inducting technologists who are again
time limited by the relevance of their technology. Hence the key innovators
are to be on the Board. Leadership should be distributed to provide ownership
to the innovators and actual man on the job. Boards are to be formed on the
basis of structure, process, culture and remuneration, and Corporate
Entrepreneurship or Community to be formed to encourage self-governance.
Ethical issues will dominate with more technological development, hence
ethical codes has to be formulated in all corporate entity. Environment
management will hold the key for future hence corporate social responsibility
will be crucial. Ethics will be redefined as goodness advances with a mix of
altruism and self-interest. Corporations can no longer see themselves as self-
lxxxviii
centered concerns; they should look into their higher self and make positive
commitments to larger issues that confront the mankind. Corporations have to
pledge to honour their obligation to the society by becoming an economic,
intellectual and social asset to each nation and each community in which they
operate and it should be freedom from greed.
Richard Leblanc and James Gillies (2005) 127
have made studies
based on the observation of boards and board committee in real time and
almost two hundred interviews with directors, regulators and students of
corporate governance over a five year period, undertaken. They confirmed
that there is a casual relationship between governance and performance
suggesting, those boards constructed on the competencies and behavioural
characteristics of individual directors lead to superior corporate performance.
Everyone that is, stakeholders, the community and the economy benefits from
well run corporations operating profitably within fair, efficient capital
markets, and everyone suffers when corporations fail. Their research
continued to flesh out the competency, behavioural, strategy and recruitment
model in establishing the relationship between corporate returns and a certain
pattern of corporate governance, although no practitioners or scholars is quite
sure what that pattern is.
Atty. Rene G. Banez & Jilla S. Decena (2005) 128
has concluded that
the basic problem besetting the corporate world today is simply the absence of
trust or the lack of it. The challenge is now to go back to basics and to stick to
the fundamentals by rediscovering, relearning and reliving the old fashioned
values of integrity, honesty, transparency and accountability. This is the key to
restoring and enhancing trust in the workplace because the foundation of good
corporate governance is trust. This could have prevented the corporate
scandals in the world if better disclosure would have been trust affected. The
excesses and greediness of the corporate world could only have been
lxxxix
prevented the executives involved have the right and correct values. They
have also stressed that credibility and utility of corporate governance are
compliance and enforceability which are very much interrelated. Compliance
will be enhanced if regulators are competent and capable to enforce the laws
and rules. Thus, compliance is expected and even exceeded if values are
rooted in the organization and ethics is observed.
Y.M. Kale (2005) 129
has observed that moves are afoot globally to
promote convergence of good corporate governance practices. International
Accounting Standards with linkages to International Organization of
Securities Commission, which represents most of the world’s regulating Stock
exchanges, are pulling towards a harmonization of desirable corporate
governance practices. Yet the sober truth is that corporate governance
practices in various countries remain divergent. India can be proud of what it
has achieved so far incorporate governance practices but, of course, much
more needs to be done.
Nitin Agarwal (2005) 130
has explained the issues to be considered,
while reviewing the recent changes in clause 49 in the listing agreement of
SEBI. According to him, the issues are related to policing and punishment,
apprehension about excessive interference and the practice of companies
ticking checklists instead of focusing on the spirit of good governance. Hence,
the compliance of the corporate governance practices has to come through
conviction and self-discipline of top management. In order to ensure that the
companies adopt corporate governance in letter and spirit, a small corpus of
legally mandated rules is needed along with a larger body of self-regulation
and voluntary compliance.
Suresh C. Senapathy (2005) 131
has observed that one of the most
powerful notions in corporate governance is the presence of independent or
xc
non-executive directors on the board of a company. These are the white
knights of shareholders, expected to provide an ongoing strategic direction
and support to the executive management through their expertise, experience
and most critically, their independence. Bringing in ‘stakeholder interest first’
in every corporate decision and action is the key expectation from these
stalwarts. However, some of the recent examples in corporate history have
questioned this very fundamental premise-independence of a Independent
director. Hence, it is early days to reach any judgment, as having independent
directors on the board is a more recent phenomenon in India than in west. He
concluded that India Inc. is on right track so far, and the journey should be
continued through regulation and practice, as it can take the companies to
greater heights of value creation by following the best corporate governance
practices.
Niu(2006) 132
examined the association between corporate governance
mechanisms (including board composition, management shareholding,
shareholders rights and the extent of disclosure of governance practices) and
earnings quality, measure in two ways, namely, earnings management and
earnings informativeness. Using a sample of Canadian firms and applying
Kothari et al. and Larcker and Richardson as earnings quality measurements,
her empirical tests demonstrate that the level of independence of board
composition is negatively related to the level of abnormal accruals.
Abdul Rahman and Ali (2006) 133
investigated the extent of the
effectiveness of the board of directors, the audit committee and concentrated
ownership in constraining earnings management among Malaysian listed
firms. Their study reveals that earnings management is positively related to
the size of the board of directors.
xci
Mallin, (2007) 134
conceded that NEDs should be paid a fee
commensurate with the amount of time that they are expected to devote to
their role, but she argues that remunerating NEDs with share options is
inappropriate as it may give NEDs a rather unhealthy focus on the short term
share price of the company.
Osma (2008) 135
explored different types of earnings manipulation and
analyses the effect of independent boards on constraining research and
development (R&D) spending manipulation. They surveyed all UK non-
financial firms and the results indicate that independent directors are
capable of identifying and constraining earnings management represented by
R&D cuts and can see through this type of manipulation
Siregar and Utama (2008) 136
investigated the effect of ownership
structure, firm size and corporate governance practices on earnings
management using Indonesian companies listed on the Jakarta Stock
Exchange. They do not find evidence that firms with independent boards
engage in informative earnings management.
Adams et. al. (2009) 137
conducted a large survey to investigate outside
directors roles as advisors and monitors of management. He found that
directors who primarily monitor management perceive that they
participate less in boardroom discussion than other directors and that the CEO
often asks them for advice.
Dimitropoulos and Asteriou (2010) 138
examined the impact of
board independence on earnings management for 97 non-financial firms listed
on the Athens Stock Exchange in Greece for the years 2000 through 2004.
They use discretionary current accruals to measure earnings management and
consistent with Anglo-American countries studies, they find that board
independence is significantly and negatively related to their EM proxy.
xcii
2.3 RESEARCH GAP
The review of literature indicates that even though there is a plethora of
research literature on CG, most of the studies have been done on its
conceptual framework, the practices of CG, and the Chief Executive Officer
characteristics influencing company’s performance, the role of the board and
shareholders wealth maximisation for the efficient markets of the developed
nations of the world like US, UK etc., In India, very limited research work is
done on perception of the stakeholders on CG practices and the prevalent
situation in listed software companies is rarely studied even though as per the
code issued by Government they have to follow CG practices mandated in the
listing agreement. Hence this study is taken up to identify and analyse the
stakeholders’ perception towards their level of expectation and satisfaction on
CG practices in the select software companies in India.
2.4 CONCLUSION
A review of literature has been made to establish
the validity of the research topic, “ A Study on the
Stakeholders’ Perception of Corporate Governance
Practices with reference to the Software Companies in
India”. The different theories pertaining to CG put forth
by various corporate analysts have been reviewed. Thus
the study has embarked upon the analysis of perception
towards the expectation and satisfaction on CG
practices in select software companies, in the light of the
recent recommendations and codes issued by
Government and quasi-judicial authorities, fastening the
gap in the field of research on CG.
xciii
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CHAPTER - III
PROFILE OF SOFTWARE COMPANIES
3.1 INTRODUCTION
There are five software companies chosen for the study, namely
Infosys, Wipro, TCS, HCL and Satyam. A brief profile of these software
companies are discussed below, which are relevant for the research topic, "A
study on the stakeholders’ perception of corporate governance practices with
reference to the software companies in India".
3.2 INFOSYS TECHNOLOGIES LTD.1
Infosys Technologies Ltd., (NASDAQ: INFY) was started in 1981 by
seven people with US$ 250. Today, they are a global leader in the “next
generation” of IT and Consulting with revenue of US$ 5.4 billion (LTM Sep-
10). Infosys defines, designs and delivers technology-enabled business
solutions that help Global 2000 companies win in a Flat World. Infosys also
provides a complete range of services by leveraging their domain and business
expertise and strategic alliance with leading technology providers. Their
offerings span business and technology consulting application services,
system integration, product engineering, custom software development,
maintenance, re-engineering, independent testing and validation services, IT
infrastructure services and business process outsourcing. Infosys pioneered
the Global Delivery Model (GDM), which emerged as a disruptive force in
the industry leading to the rise of offshore outsourcing. The GDM is based on
the principle of taking work to the location where the best talent is available,
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where it makes sense the best economic sense, with the least amount of
acceptable risk.
Infosys has declared its vision, mission and values. Vision - “To be a
globally respected corporation that provides best-of-breed business solutions,
leveraging technology, delivered by best-in-class people”. Mission – “To
achieve the objectives in an environment of fairness, honesty and courtesy
towards the clients, employees, vendors and society at large” Values - Infosys
believe that the softest pillow is a clear conscience. The values that drive
Infosys underscore is commitment to: Customer Delight - To surpass
customer expectation consistently, Leadership by Example - To set standards
in our business and transactions and be an exemplar for the industry and
Infosys, Integrity end Transparency - To be ethical, sincere and open in all the
transactions, Fairness - To be objective and transaction -oriented, and thereby
earn trust and respect, Pursuit of Excellence - To strive relentlessly, constantly
improve the teams, and services end products to become the best.
Fortune magazine identified Infosys among the top companies that
“inspire, nurture and empower a new generation of global leader’s they are
committed to remain among the industry’s leading employees. ‘In God we
trust, everyone else must come with data’ is an off-heard phrase at Infosys.
The consultancy benchmarks the services and processes against globally
recognized quality standards. Infosys certification includes SEI-CMMI Level
5, CMM Level 5, PCMM Level 5, TL 9000 and ISO 9001-2000. In February
2007, Infosys BPO was certified for ESCM level 4.0, the E-Sourcing
Capability Model for Service Providers developed by a consortium led by
Carnegie Mellon University’s Information technology services qualification
center.
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Infosys began its journey in India’s business environment in the 1980’s
in an era when endless red tapism was imposed on the private sector. In this
environment building a company whose long-term objectives included
operational longevity, high ethical standards and global respect demanded
commitment to a core set of values. For Infosys, these values focus on
instilling trust in relationships with all stakeholders, including employees,
investors, clients, society and the communities in which Infosys operates.
Infosys believe that they must develop trust with the communities in which
they operate to achieve longevity as a corporation. Through the Infosys
Foundation, which receives a grant every year from Infosys, the last year's
grant was US $ 3 million, Infosys contribute to betterment of healthcare
(hospitals, infrastructure), education (books, scholarships, refurbishment of
infrastructure) and skills. Infosys emphasizes its commitment to investors
through stringent corporate governance. Infosys was also among the first
Indian companies to voluntarily comply with the US Generally Accepted
Accounting Principles (GAAP) and now provides financial results in the
GAAP of six countries.
Employees hailing from over 70 nationalities, Infosys have built an
enduring value system based on openness, honesty, fairness and transparency,
which has earned them the confidence and trust of Infosys clients. Infosys
enjoy plus 95 per cent customer retention. Infosys has built one of the largest
corporate education centers in the world. This “finishing center”, with an
annual capacity of’ 15,000, provides engineering graduates who aspire to be
employees with the equivalent of a Bachelor of Science degree in Computer
Science from an American university. The partnership focuses on developing
solutions that incorporate Infosys IP and the alliance partners’ technology and
services. Infosys jointly deliver and market Infosys solutions to clients across
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multiple industries and geographies in different technologies like SAP,
Oracle, and Microsoft.
Infosys has a global footprint with 63 offices and development centers
in India, China, Australia, the Czech Republic, Poland, the UK, Canada and
Japan. Infosys and its subsidiaries have 1,22,468 employees as on Sep 30th
2010. Infosys takes pride in building strategic long term client relationship.
Over 97% of their revenues come from existing customers (FY’10)
3.3 WIPRO TECHNOLOGIES LTD.2
Wipro is at the forefront of technological and business co-innovation
with 136 patents and invention disclosures. With enhanced business
performance at the core of its deliveries due to its strong R&D and Innovation
focus, Wipro gets an enviable 95 per cent repeat business. With more than
100,000 associates from over 70 nationalities and 72 plus global delivery
centers in over 55 countries, Wipro’s services span financial services, retail,
transportation, manufacturing, healthcare services, energy and utilities,
technology, telecom, and media. Wipro’s unwavering focus has been on
business transformation with matchless innovation in service delivery and
business models. More than 800 active clients that include Governments,
educational institutes, utility services, and over 150 Global Fortune 500
enterprises have benefited from this approach.
Wipro’s complete range of IT Services addresses the needs of both
technology and business requirement to help organizations leverage leading-
edge technologies for business improvement. Wipro takes change of the IT
needs of the entire enterprise. The gamut of services extends from enterprise
application Service (CRM, ERP, e-Procurement and SCM), to e-Business
solutions. Wipro enterprise solutions have served and continue to serve clients
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from a range of industries including energy and Utilities, finance, Telecom,
and Media and Entertainment. Wipro’s Technology Infrastructure services
(TIS) is the largest Indian IT infrastructure Services provider in terms of
revenue, people and customers with more than 200 customers in US, Europe,
Japan and over 650 customers in India. It is powered expert skills of over one
lakh technical specialists and state-of-the-art BS 15000 certified infrastructure
for operations support. A phased approach towards process standardization,
process optimization and process re-engineering is achieved. Wipro BPO
provides a board range of services from customer relationship management,
back office transaction processing to industry specific solutions. The key
element of services delivery is an integrated approach towards providing
increasing value over the entire course of the client relationships. This
involves a phased approached towards process standardization, process
optimization and process re-engineering.
Reinvention and Wipro go hand-in-hand as far as technology and
process advancement is concerned, Wipro Technologies is a global IT
services company that provides Consulting, Business Process Outsourcing,
Business Technology Services, Enterprise application Services, Infrastructure
management, Testing, Products Engineering, Engineering Design and Product
Support. Wipro services arc spread across a range of strategic domains.
Wipro is the first CMM1 Level 5 certified software services company
and the first outside USA to receive the IEEE Software Process Award.
However, when Wipro was formed as a vegetable oil refining company in
1947 the dramatic change in the company’s industry dynamics could only
have been predicated considering the fact that it was always reinventing itself.
Now, after three decades in the IT industry, backed with unmatched technical
expertise and insights, Wipro have maintained the highest levels of
compliance and quality that go with the changing times and technologies. The
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knowledge investments are backed by years of R & D and have led to the
creation of labs and ‘Centers of Excellence’ that have produced innovative
Solutions. Wipro Technologies is a global services provider delivering
technology-driven business solutions. Wipro is the No.1 provider of integrated
business, technology and process solutions on a global delivery platform.
Azim Premji is the Chairman of Wipro Technologies. He took over the
mentor of leadership of Wipro at the age of 21 in 1966. Under his leadership,
the fledging US$ 2 million hydrogenated cooking fat company has grown to a
US$ 1.76 billion IT services organization serving customers across the globe.
Wipro is presently ranked among the top 100 Technology companies in the
world. It has more than one lakh employees, serves 592 clients, and has 46
development centers across globe.
Wipro is the largest independent provider of R&D services in the
world. Using 'Extended Engineering' model for leveraging R&D investment
and accessing new knowledge and experience across the globe, people and
technical infrastructure. Wipro enables firms to introduce new products
rapidly. Business Process Outsourcing - Wipro provides business process
outsourcing services in areas finance & accounting, Procurement, HR
services, Loyalty Services and Knowledge Services. IN 2002, Wipro
acquiring Spectra mind and became one of the largest BPO service players.
Consulting Services - Wipro offers services in Business Consulting, Process
Consulting, Quality Consulting, and Technology Consulting.
Wipro group includes, a) Wipro Infrastructure Engineering - It has
emerged as the leader in the hydraulic cylinders and truck tipping systems
market in India. b) Wipro InfoTech - It is one of the leading manufacturing of
computer hardware and a provider of systems integration services in India.
c)Wipro Lighting - It manufactures find markets the Wipro brand of
luminaries. Wipro Lighting offers lighting solutions across various application
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areas such as commercial lighting for modern work spaces, manufacturing and
pharmaceutical companies, designer petrol pumps and outdoor architecture.
Some of the achievements of Wipro includes, first Indian IT Service Provider
to be awarded Gold — Level Status in Microsoft’s Windows Embedded
Partner Program, World’s largest independent R&D Services Provider,
World’s 1st ICMM Level 5 software company, World’s 1
st IT Services
Company to use Six Sigma, The first to get the BS 15000 certification for its
Global Command Centre, among the top 3 Offshore BP0 service providers in
the world, only Indian Company to be ranked among the ‘Top 10 global
Outsourcing Providers’ in the IAOP-Fortune Global 100 listings, first
company in the world to be certified in BS 7799 (2002) security standards.
Wipro’s IT division provides solutions and services including systems
integration, information systems outsourcing, IT enabled services, package
implementation, software application development and maintenance, and
research and development services to corporations. The company provides
PCMM Level 5 and SEI CFMM Level 5 certified IT services. It also provides
IT solutions and services for the corporate segment in India, offering system
integration, network integration, software solutions and IT services. In the
Asia Pacific and Middle East markets, Wipro provides IT solutions and
services for global corporations. Wipro is also engaged in market segments of
consumer products, lighting, furniture, eco energy, water treatment and
hydraulic business. It operates in four segments. IT services, IT Products,
Consumer Care and Lighting, and Others. On December 9, 2009, it acquired
Lornamead FZE and Lornamead Personal Care Private Limited.
One of the world’s largest third party R&D services provider, Wipro
caters to product engineering requirements in multiple domains. Most of the
technology that come across in daily life - airplanes, automobile navigation
systems, cell phones, computing servers, drug delivery devices, microwaves,
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printers, refrigerators, set top boxes, TVs - will find a Wipro component in
them. The service portfolio includes product strategy and architecture,
application and embedded software, electronic and mechanical hardware,
system testing, compliance and certification and product sustenance and
support. Wipro believes that certain core technologies have a significant
impact on business competitiveness going forward. Towards that direction,
Wipro’s Research and Development activity is currently focused on Cloud
Computing, Collaboration, Green Technologies, Mobility Applications, Social
computing, information management and security.
3.4 TATA CONSULTANCY SERVICES LTD.3
TCS is Software services consulting company headquartered in
Mumbai, India. TCS is the largest provider of information technology and
business process outsourcing services in Asia. TCS has offices in 42 countries
with more than 142 branches across the globe. The company is listed on the
National Stock Exchange and Bombay Stock Exchange of India. Tata
Consultancy Services started in 1968, as a division of Tata Sons Limited. In
August 2004 Tata Consultancy Service Limited made its IPO. Mr. Ratan Tata
who is presently the Chairman was entrusted with the job of Steering TCS.
The early days marked TCS responsibility in managing the punch card
operations of Tisco. The company, which was into management consultancy
from day one, soon felt the need to provide solutions to its clients as well.
TCS was the first Indian company to make forays into the US market with
clients ranging from IBM, American Express, Sega etc. TCS is presently the
top software services firm in Asia. During the Y2K buildup, TCS had setup a
Y2K factory in Chennai as a short-term strategy. Now, with e-business being
the buzzword, the factory is developing solutions for the dotcom industries.
Today, about 90 per cent of TCS revenue comes from consulting, while the
rest from other products. TCS has great training facilities, in addition to
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training around 5 per cent of the revenue is spent upon its R&D centers like
the Tata Research Design and Development Centre at Pune, along with a host
of other centers at Mumbai and Hyderabad.
It benchmarked its quality standing, invested heavily in software
engineering practices and built intellectual property-in terms of patents, code
and branded products. At the same time, it expanded its relationships with
technology partners and organizations, increased linkages with academic
institutions and incubated technologies and ideas of people within TCS and
outside. TCS has already patented 12 e-Commerce solution product packages
and has filed six more applications for patent licenses. Over $25 million were
spent on enhancing hardware and software infrastructure. The company now
has 72 offices world wide. As many as seven centers were assessed at SEI
CMM Level 5 last year (3.4 mistakes in a million opportunities).These include
Chennai, Mumbai, Bangalore, Calcutta, Hyderabad and Lucknow. Several
business and R&I relationship with global firms like IBM, General Electric,
and Unigraphics Solutions have been made. The present CEO of the company
is Mr. S.Ramadorai. The company’s employee’s strength is more than one
lakh.
TCS uses its industry experience and technology expertise to
effectively develop products, tools and methodologies that help bring
solutions to the fore more quickly and with higher quality. These tools helped
them achieve a customer satisfaction rating of 87 per cent a figure much
higher than the industry standards for on-time project delivery. Over the
years, TCS have evolved processes and systems that capture critical client
needs, survey the set of existing third-party tools technologies, and then
develop solution accelerators that help clients achieve quicker outcomes. TCS
have over 50 Centers of Excellence which track domain and technology trends
and address the most critical client needs through specific frameworks or
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methodologies that accelerate the implementation process for third-party
products. TCS is a preferred alliance partner for most leading IT product and
platform companies, including Oracle, SAP, Microsoft, IBM and HP, among
others. With intimate knowledge of their technologies and products, TCS
build complementary solution accelerators that help clients in specific
industries such as textile manufacturing, or with specific needs (e.g., an ERP
platform upgrade) that leverage the true potential of these technologies.
A pioneer in software R&D, TCS, today, has an innovative
environment that offers a research-based solutions in leading edge
technologies that will help to meet your IT expectation and support business
objectives. Innovation Ecosystem includes TCS Innovation Labs, TCS Co-
Innovation Network (COIN), incubation Group. Innovation Events are
'Innovation Days' help key customers and TCS researchers to collaborate on
specific solutions. 'Innovations Forums' held annually in the UK and USA
helps to build as confidence of thought leaders and researchers from
academia, start-ups and customers, bringing value through shared experiences
and offering a preview of technologies and solutions of the coming decade.
Innovation Culture helps for Awards for young innovators, coding
competitions, research workshops and conferences where scientists of
international repute participate and create a fertile environment for TCSers,
enabling them to think creatively around customer solutions. TCS has created
a strong IPR base and has stepped up invested such as patents, copyrights and
trademarks. TCS have a strong network of partners with a joint objective of
helping the TCS customers become high-performance businesses by
maximizing the value of their technology investments. TCS partner programs
are specifically designed to jointly work on partner tools and receive the
necessary training, support and resources on partner technology products. This
enables TCS customers to advance their businesses. TCS global alliance
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mission in partnering with various organizations is to ensure that both TCS
and the partner organizations derive the maximum benefits for TCS
relationship, in terms of growth of services and products.
The Business Value for TCS clients includes, reduced risks and costs
associated with the technology procurement process and technology
ownership, competitive advantage by leveraging TCS industry, product and
service expertise and the partner’s technology products and services, reduced
IT costs with cost-effective solutions at scale, reduced risks through end-to-
end solutions, ability to leverage training resources to help plan and build
solutions using Partner products and seamless solutions. The TCS-Alliance
Partner Advantage includes, partner organizations and TCS work together to
create new offerings, privileged access to development software, architectural
expertise and sizing and configuration assistance, key benefits and resources
for building and selling solutions supporting Partner systems and joint go-to-
market initiatives.
Both on its own and as part of the Tata Group, TCS has actively
implemented programs and initiatives for the betterment of society,
communities and the environment, since its inception. TCS believe in giving
back to all the communities to operate with and in utilizing IT as an
instrument for social development and progress. TCS is deeply committed to
the causes of’ education and the environment and the setting up and
maintenance of infrastructure for urban beautification, pollution reduction and
healthcare, waste management in the office environment, tree plantation and
water treatment.
IT Solutions and Services (74.9 per cent of net sales) of TCS, is a
segment that develops IT products for and offers IT services to customers.
Some of these IT products include software applications and systems for
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performance management, customer relationship management and supply
chain management. Some of the company’s IT services include software
application management, system integration, data mining and data quality
management. Business Process Outsourcing (6.2 per cent o net sales) of TCS
is another segment that helps customers automate and complete specific non-
core business tasks. Some of these non-core business tasks include payroll,
finance and accounting, and human resources. The Engineering and Industrial
Services (5.4 per cent of net sales) of TCS. Segment helps customers engineer
and manage products, design and Automate Plants, and source for and
manufacture components. IT Infrastructure Services (6.5 per cent of net sales)
of TCS builds and maintains IT infrastructure for customers, Asset Based
Offerings (3.6 per cent of net sales) of TCS develops IT products for and
offers IT services to customers that Operate specifically in the banking,
financial services and insurance industries.
Now, with a presence in 34 countries across 6 continents, & a
comprehensive range of services across diverse industries, TCS is one of the
world’s leading Information technologies companies. Six of the fortune top 10
companies arc among the TCS valued customers. TCS is the part of one of
Asia’s largest conglomerates - the TATA Group - which, with its interests in
Energy, Telecommunications, Financial Services, Chemicals, Engineering &
Materials, provides us with a grounded understanding of specific business
challenges facing global companies. TCS is a leading IT services provider,
with a wide breadth of services across the entire Information technology
spectrum. TCS provides following services & solutions; Consulting, IT
Services, BPO, IT Infrastructure Services, Engineering and Industrial
Services, Product Based Solutions. Over $25 million were spent on
enhancing hardware and software infrastructure.
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3.5 HCL Ltd.4
HCL is a leading global Technology and IT Enterprise with annual
revenues of US$ 5.9 billion. The 3 decade old enterprise, founded in 1976, is
one of India's original IT garage start ups. Its range of offerings span R&D
and Technology Services, Enterprise and Applications Consulting, Remote
Infrastructure Management, BPO services, IT Hardware, Systems Integration
and Distribution of Technology and Telecom products in India. The HCL
team comprises 80,000 professionals of diverse nationalities, operating across
31 countries including 500 points of presence in India. HCL has global
partnerships with several leading Fortune 1000 firms, including several IT and
Technology majors. From aeronautics to life sciences, HCL touches millions
of people through technology across the world every day. Developed the first
indigenous micro-computer at the same time as Apple and 3 years before
IBM's PC – in 1978. This micro-computer virtually gave birth to the Indian
computer industry. Shiv Nadar is the founder of HCL.
HCL Technologies is a leading global IT services company, working
with clients in the areas that impact and redefine the core of their businesses.
Since its inception into the global landscape after its IPO in 1999, HCL
focuses on 'transformational outsourcing', underlined by innovation and value
creation, and offers integrated portfolio of services including software-led IT
solutions, remote infrastructure management, engineering and R&D services
and BPO. HCL leverages its extensive global offshore infrastructure and
network of offices in 26 countries to provide holistic, multi-service delivery in
key industry verticals including Financial Services, Manufacturing, Consumer
Services, Public Services and Healthcare. HCL takes pride in its philosophy of
'Employees First' which empowers our transformers to create a real value for
the customers. HCL Technologies, along with its subsidiaries, had
cxxiii
consolidated revenues of US$ 2.9 billion (Rs. 13,145 crores), as on 30th
September 2010 (on LTM basis).
HCL Infosystems Ltd., is India’s premier hardware, services and ICT
systems integration company offering a wide spectrum of ICT products that
includes Computing, Storage, Networking, Security, Telecom, Imaging and
Retail. HCL is one-stop-shop for all the ICT requirements of an organization.
India’s leading System Integration and Infrastructure Management Services
Organization. HCL has specialized expertise across verticals including
Telecom, BFSI, eGovernance & Power, HCL has India’s largest distribution
and retail network, taking to market a range of Digital Lifestyle products in
partnership with leading global ICT brands, including Apple, Cisco, Ericson,
Kingston, Kodak, Konica Minolta, Microsoft, Nokia, Toshiba, and many
more.
The TIME magazine has referred to HCL as an "intellectual clean room
where its employees could imagine endless possibilities". The fact is, over the
last thirty years that HCL has been operational, the company has stood by its
values and core philosophy. Fuelled by the entrepreneurial zeal of its
founders, HCL developed the first indigenous micro-computer in 1978, at the
same time as Apple. Since then, HCL has had a 3 decade rich history of
inventions and innovations. Intrapreneur is the term that best describes the
HCL employees. Ever since HCL entered into an alliance in 1970s,
partnerships and HCL have been inseparable. Bonds have been forged with
partners to co - create value. Strong inorganic growth is a testimony to the
spirit of partnerships. This entrepreneurial and win-win relationship driven
culture continues to guide HCL in all its endeavours.
HCL Technologies has been declared as one of Britain’s Top
Employers for 2011 for the fifth consecutive year by the Corporate Research
cxxiv
Foundation (CRF) Institute. HCL was valuated in a Gartner report - ‘HCL
positions itself as 'CIO's Best Friend' at its 2010 North American and
European Analyst Events’ by Arup Roy et al, 19 January 2011. HCL has
been positioned as a Leader in a recently published Gartner report titled
‘Magic Quadrant for Help Desk Outsourcing, North America’ by William
Maurer, Bryan Britz, Helen Huntley and David Edward Ackerman, 29 March
2011” (The Magic Quadrant is copyrighted 2011 by Gartner, Inc. The Magic
Quadrant is a graphical representation of a marketplace and for a specific time
period. It depicts Gartner’s analysis of how certain vendors measure against
criteria for that marketplace, as defined by Gartner. Gartner does not endorse
any vendor, product or service depicted in the Magic Quadrant, and does not
advise technology users to select only those vendors placed in the 'Leaders'
quadrant. The Magic Quadrant is intended solely as a research tool, and is not
meant to be a specific guide to action. Gartner disclaims all warranties,
express or implied, with respect to this research, including any warranties of
merchantability or fitness for a particular purpose). HCL has been named as a
Leader in the report titled ‘Forrester Wave™: Global IT Infrastructure
Outsourcing, Q1 2011’, published in March 2011 by Forrester Research, Inc.
HCL emerged as one of the strongest India-centric Infrastructure Management
Providers in this report.
Forrester Research, Inc. recognized HCL as a consultancy that offers
professional services in smart grid IT capabilities and service in its February
2011 report ‘Market Overview: Smart Grid IT Vendors’. IDC in a report
titled ‘Vendor Assessment: HCL's Profile for Asia/Pacific (Excluding Japan)
Public Sector IDC Government Insights #AP9694204S’ said, “HCL is poised
to compete in the region among other Indian multinational companies, and
undertake more complex transformation-related SI and managed services
engagements typically characterized by public sector projects” . In another
cxxv
report titled ‘HCL: Vendor Profile Series for Cloud Professional Service
Offerings(IDC #225071)’, IDC recognized HCL’s unique Cloud offerings -
“HCL's strategy focuses not only on being a systems, or service integrator but
also on being a cloud service provider with unique offerings related to its
engineering services heritage”. Springboard Research has adjudged HCL as
the ‘Indian IT Company of the Year 2010 for the Domestic Market’ in report
titled India IT Market Predictions 2011 published on Jan 5, 2011. TPI has
named HCL amongst Top 15 Service Providers by total contract value (TCV)
in the Americas and amongst the Top 7 Service Providers by TCV in APAC
in its report titled The TPI Index: An Informed View of the State of the Global
Commercial Outsourcing Market Fourth Quarter and Full Year 2010,
published on Jan 20th, 2011.
TowerGroup, a leading research and advisory services firm for
financial services industry, has recognized HCL as a vendor who can help
financial institutions ensure they are in compliance with the regulations such
as CARD Act and the Dodd-Frank Act in its December 2011 report ‘The
Consumer Financial Protection Bureau: Threat for Banks, Opportunity for
Vendors’ . Novarica, a division of Novantas LLC, a leading management
consultancy and information services provider for the financial services
industries has recognized HCL as one of the major IT services providers to
North American banks in a report titled ‘Novarica Market Navigator’
published in February, 2011. The International Association of Outsourcing
Professionals (IAOP) has named HCL a Leader in the 2011 HCL has been
felicitated with the prestigious QCI-DL Shah National Award 2011 on
Economics of Quality for the second consecutive year. The Quality Council
of India (QCI) and the DL Shah Trust honoured HCL with its most prestigious
citation - the ‘National Best of All Award’. The award was presented to HCL
at the 6th National Quality Conclave held in New Delhi. HCL Technologies
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has won three REMMY (the Recruitment Marketing Awards) awards for
2011. These annual awards, presented by the Times Group, recognize and
felicitate the creative genius behind the best advertisements in the field of
recruitment marketing. HCL won the Best Recruitment Ad in IT and Telecom
industry, the Best Art Direction, and the Grand Prix Award (Best Recruitment
Ad across industries).
3.6 SATYAM COMPUTER SERVICES LTD.5
Satyam Computer Services Limited, now known as Mahindra Satyam
(OTC: SAYCY), a leading information, communications and technology
(ICT) company providing top-class business consulting, information
technology and communication services. Leveraging deep industry and
functional expertise, leading technology practices and a global delivery
model, they enable companies achieve their business goals and transformation
objectives. They are part of the $7.1 billion Mahindra Group, a global
industrial conglomerate and one of the top 10 industrial firms based in India.
The Group’s interests span financial services, automotive products, trade,
retail and logistics, information technology and infrastructure development.
Satyam Computer Services Limited offers consulting and information
technology (IT) services worldwide. The company operates in three segments:
IT services, Business Process Outsourcing (BPO), and Software Products. The
IT services segment provides a range of services, including software
development, packaged software integration, system maintenance and
engineering design services. Its BPO segment provides services covering
human resources, finance and accounting, customer contact and transaction
processing. Its software products segment engages in the product development
and creation of propriety software. The company offers services to customers
in a range of industries, including insurance, banking and financial services,
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manufacturing, telecommunications, transportation and engineering services.
The company markets its services primarily to companies in the United States,
Europe, the Middle East, and the Asia-Pacific region. The company has a
strategic alliance with Mind Flow Technologies Inc.
Satyam offers end-to-end IT solutions for a range of key verticals and
horizontals. Satyam Computers has domain expertise in verticals such as
Automotive, Banking & Financial Service, Insurance & Healthcare,
Manufacturing, Telecom, Infrastructure, Media, Entertainment, and
Semiconductors. Satyam has more than 40,000 employees on its rolls,
working in development centers in India, the USA, the UK, the UAE, Canada,
Hungery, Singapore, Malaysia, China, Japan and Australia. Satyam
Computers network is spread over 55 countries across 6 continents. Satyam
serves over 558 global companies including over 163 Fortune 500
corporations.
Satyam Computers was founded in June 1977 as a private limited
company at Hyderabad by Ramalinga Raju along with one of his brothers-in-
law, DVS Raju. In June 1991, Satyam Computers got its first Fortune 500
Client. In the same year in August, Satyam Computers was recognized as a
Public Limited company. Satyam went public in May 1992 and its issue was
oversubscribed 17 times. In July 1993, Satyam entered into a joint venture
with Dun & Bradstreet. Satyam was awarded ISO 9001 Certification in March
1995. In December 1995, satyam Infoway was incorporated. In May 1997,
Satyam became the first IT Company to get ITM Certification for Y2K
solutions. In November 1998, Satyam became one of the first companies to
enter Indian internet service market with the launch of Satyam Info way’s ISP
service. In the same year satyam entered into a joint venture with GE. In 1999,
satyam infoway became first Indian Internet Company to be listed on
NASDAQ. In February 2000 Satyam was declared one of 100 most
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pioneering Technology Companies by World Economic Forum, Davos. In
May 2000 satyam became the first organization in the world to launch
Customer-Oriented Global Organization training. In March 2001 satyam
became first ISO 9001:2000 Company in the world as certified by BVQI. In
May 2001 satyam was listed on New York Stock Exchange. In 2003, satyam
announced business continuity center in Singapore, the first of its kind outside
India. In 2004, satyam opened new development center in Mississauga,
Canada. In 2005 satyam acquired 100% stake in Singapore based Knowledge
Dynamics, a leading Data Warehousing and Business Intelligence solutions
Provider.
The Achievements of Satyam Computers include, first Indian IT
Company to get ITM Certification for Y2K Solutions, Satyam Info way is the
first Indian Internet company to be listed On NASDAQ, declared one of ‘100
Most Pioneering Technology Companies’ by World Economic Forum, Davos.
in the year 2000, first organization in the world to launch Customer-Oriented
Global Organization training, first ISO 9001:2000 Company in the world as
certified by BVQI, ranked by the Brown-Wilson Group as the number two
outsourcing vendor globally in the year 2006.
Satyam Computer Services Ltd. the group’s principal activities are to
provide ‘information technology services, internet services and develop
software products. The ranges of services include consulting, system design.
Software development, system integration and application maintenance. The
Group provides its services to a wide range of industries including insurance,
banking and financial services, manufacturing, tele-communications,
transportation and engineering services. The Group has offshore development
centers located throughout India.
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In 1993 company has entered into a joint venture agreement with Dun
& Bradstreet Corporation, U.S.A. for development of software. In 1994
January 26th a joint venture company called Dun & Bradstreet Satyam
Software (P) Ltd. was incorporated. In 1995 company issued 37,17,000 12%
unsecured fully convertible debentures part “A” of Rs.100 each on right basis
for the shareholders in proportion of 1 FCD for every 5 shares held. The
company also issued 37, 17,000-12 per cent FCD’s-part ‘B’ Rs.60 per
debentures in August which can be converted into equity shares of Rs. 10 each
at premium of Rs.50 per share on August 1996. During the year two offices
were setup, one in USA and other in Japan. And the company has added new
business partners in Australia, Canada, Japan and Europe. During the year
company promoted subsidiaries, namely Satyam Renaissance Consulting Ltd.,
Satyam Enterprise Solutions Pvt. Ltd., and Satyam Infoway Pvt. Ltd.
In 1997 company has added additional space in Secunderabad and
Bangalore. And new software development centers were opened in
Hyderabad, Pune, Chennai and Bhubaneswar during the year. The company
has established a school at Indian Institute of Information Technology at
Hyderabad, joining a select band of global corporations like IBM, Microsoft
and oracle who are also participating in lIT’s activities.
In the year 1999 the company has set up offsite development centers
which had high margin business and also ventured into the euro conversion
business which is slowly taking-off. Satyam Computer Services Ltd. set up
two offsite development centers in addition to the existing seven centers
across the world. Satyam Computer Services Ltd., one of the fastest growing
IT companies in the country, took significant decisions recently including the
merger of three of its subsidiaries with the parent company and a 1:1 bonus
issue. The company has also set up India’s first Indian Institute of Information
cxxx
Technology and is the first software company in India to get accredited by
(SET CMM) level 5 certificates.
In 2008 Satyam Computer Services Ltd. has informed that Satyam
BPO, the business process outsourcing arm of Satyam, a leading global
business and information technology services Company, on April 10, 2008
announced that it has won two prestigious Shared Services Excellence awards
from the International Quality and Productivity Council. Satyam Computer
has announced it has inked a pact with Info spectrum to give third-party
maintenance, repair and overhaul (MRO) and component repair services for
the global aviation industry. The company acquired Caterpillar Market
Research & Customer Analytics Operations. At present the company has
acquired by Tech Mahindra has been announced the name change of scam hit
Satyam Computers as Mahindra Satyam. This rebranding exercise symbolizes
an amalgamation of the values of’ Mahindra Group with Satyam’s expertise.
3.7 CONCLUSION
As the understanding of the software companies taken for study is
required, the profile of select software companies were discussed. Each
company has got its own unique operations and service to their customers.
The mission and vision of the companies have an underlying importance
towards their corporate governance goals. The nature, services offered and
their corporate social responsibility indicates their commitment and passion
towards their customer satisfaction.
cxxxi
END NOTES
1. www.infosys.com
2. www.wipro.com
3. www.tcs.com
4. www.hcl.com
5. www.satyam.com
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CHAPTER - IV
METHODOLOGY
4.1 INTRODUCTION
In this chapter, the research methodology used in this study is
described and the research propositions relating to the objectives of the study
are stated. Methods available for collecting data and the characteristics of the
sample group are set out in this chapter. The rights and safety of the
participants and rules on ethics and confidentiality in collecting data are
described. In addition, the variables, questionnaire design and techniques
used to analyse data are stated.
4.2 RESEARCH DESIGN
Research Design is the overall plan for conducting the research in order
to find out the answers for the research questions / hypotheses set in the
beginning. It should be comprehensive and to include all the relevant aspects
for conducting the research at a reasonable cost and time. This includes the
sampling technique, the collection of data through various instruments, proper
statistical tools to do the data analysis and interpreting the same. This study is
basically an explorative one, wherein the primary data is sought through a
questionnaire to answer the questions based on the relevant hypothesis.
4.3 SOURCES OF DATA
The survey method was deployed in this study to gain insight and
knowledge as how the stakeholders’ perception at various levels namely
expectation and satisfaction in various software companies taken for study,
the intricacies in terms of differences among companies the way it was
perceived by the stakeholders. The primary data of the study was collected
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through a structured questionnaire. The relevant secondary data was collected
through journals, magazines, newspapers, research articles, published
information and details from websites of the software companies taken for
study.
4.3.1 Selection of respondents
In India, there are four major metropolitan cities present, out of which
Chennai is located in South India. The Madras Stock Exchange Ltd., is
located in Chennai, which has got a trading activity on major listed companies
including software companies in India. Since Chennai represents the good
section of respondents belonging to different software companies, the
respondents residing in Chennai were taken for the study. Both male and
female investors were approached and requested for filling out of the
questionnaire, irrespective of their age, educational qualifications, occupation,
monthly income, number of years of transaction, and size of investments they
held. Each of the research subjects responded to a questionnaire on
demographical details and other variables related to study.
4.3.2 Selection of Companies
The software companies were chosen based on their volume of
business and spread of their business locations across India. Infosys. Wipro,
TCS, HCL and Satyam were the highest in terms of volume of their business
and spread across India and globe. The corporate governance guidelines
issued by the Government of India is applicable to all listed companies. Since
the listing with stock exchanges in India is a pre-requisite for selecting the
software companies, the above companies were shortlisted for the study.
Some of the select companies are listed with Nasdaq, New York, US to
provide the international requirements in terms of corporate governance.
cxxxiv
4.3.3 Sampling Design
It is the theoretical basis and the practical means by which data are
collected so that the characteristics of a population can be inferred with known
estimates of error. The following subdivisions explain the sampling design of
this thesis.
4.3.3.1 Selection of Sampling Area
Chennai is the fourth largest metropolis in India. It has got the mix of
all range of people, spreading from school level to post graduate /
professional level studied investor having different background in terms of
their income, age occupation etc., Also it has the migrant residents moved
from different parts of India, say, North, East and West, representing a
population across India. This research has been carried out in Chennai as it is
a place with different profiles of the people available and thus can be used to
arrive at meaningful conclusion regarding the perception of the stakeholders
in corporate governance.
4.3.3.2 Sampling Technique
The sampling technique used in this study is convenience sampling.
Convenience sampling is a type of nonprobability sampling which involves
the sample being drawn from that part of the population which is close to
hand. That is, a sample population selected because it is readily available and
convenient. It may be through meeting the person or including a person in the
sample when one meets them or chosen by finding them through
technological means such as the internet or through phone.
4.3.3.3 Sample Size
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As the population is finite but huge in numbers convenience sampling
was adopted for the study. There are several approaches to determining the
sample size. These include a census for small populations, imitating a sample
size of similar studies, using published tables, and applying formulae to
calculate a sample size. For populations that are large, Cochran developed the
equation given below to yield a representative sample for proportions:
Equation : no = 2
2
e
pqZ
which is valid where n0 is the sample size, Z2
is the abscissa of the normal
curve that cuts off an area at the tails (1-equals the desired confidence level,
eg. 95% ) e is the desired level of precision, p is the estimated proportion of an
attribute that is present in the population, and q is 1-p. The value of Z is
found in statistical tables which contains the area under the normal curve. In
this study, we presume that population size is finite and unknown, the formula
was applied to know the sample size, and found the sample size 530 meets the
requirements.
4.3.4 Questionnaire
A structured questionnaire was administered to collect the primary
data. The Likert’s 5 point scale method was found suitable for the study, as it
has a good viability and most importantly it is easy for the respondents of
varying educational level to understand and respond. This is also the most
widely used method among the researchers and easy to construct. However
the researcher is aware of the limitations of the tool as it may not have equal
appearing intervals and requires validation of the data before analysis..
However researchers by convention treat is as an interval scale, with due
validation of the data, the same being observed in this study also.
cxxxvi
4.3.5 Pre-test
The pretesting or pilot study was conducted with an idea of testing the
reliability of the designed questionnaire. A sample of 100 respondents from
Chennai both male and female investors were selected for this purpose. Based
on the responses and views of the participants, confusing as well as difficult
questions were slightly modified to ease the responses and the questionnaire
was standardized. The prepared questionnaire was tested for reliability using
Cronbach’s Alpha, which is discussed subsequently. The non-response bias
checks were done initially by the researcher from the survey carried out and
was deemed as acceptable as the calculated final response rate was high (84%)
4.4 RELIABILITY
The Cronbach’s Alpha test was applied to find the reliability of the
following factors and the results were given in parentheses: Expectation –
Disclosure (0.765), Corporate Communication (0.782), Transparency (0.812),
General Meeting (0.712) and Overall (0.752) and Satisfaction – Disclosure
(0.876), Corporate Communication (0.959), Transparency (0.901), General
Meeting (0.958), Performance of Board (0.966), Corporate Management
Practices (0.956), Financial Practices (0.833), Secretarial Practices (0.955)
and Overall (0.924).
4.5 VARIABLES STUDIED
The variables are basically grouped into three parts, namely
demographic, expectation and satisfaction. A total of eight variables in
demographic were studied, such as gender, age, educational qualifications,
occupation, monthly income, number of years of transaction in shares, size of
investment in companies and awareness about the corporate governance
practices which forms the first part of the questionnaire.
cxxxvii
The second part of the study contains the perception of the stakeholders
on expectation towards corporate governance practices. There are in total
twenty four variables studied. The expectation variables studied are,
disclosure of income & expenditure, actual profitability, actual risk, dividend
declaration, investor relations, grievance resolution, bonus shares declaration,
cash dividend, property and paper dividend, growth information, winding up
status, financial transactions, corporate communication of allotment, issue and
transfer of shares, transparency of share allotment, borrowing loan, accessing
minutes of AGM and getting copies thereof, appointment of
directors/auditors, calling for AGM, demand for poll, inspection of books of
accounts / records and suing the officers of the company on wrongful acts.
The third part of the study contains the perception of the stakeholders
on satisfaction towards corporate governance practices. There are in total
thirty nine variables studied. The satisfaction variables studied are, disclosure
of income & expenditure, actual profitability, actual risk, dividend
declaration, investor relations, grievance resolution, bonus shares declaration,
cash dividend, property and paper dividend, growth information, winding up
status, financial transactions, corporate communication of allotment, issue and
transfer of shares, transparency of share allotment, borrowing loan, accessing
minutes of AGM and getting copies thereof, appointment of
directors/auditors, calling for AGM, demand for poll, inspection of books of
accounts / records, suing the officers of the company on wrongful acts,
composition and performance of BOD, performance of chairman, leadership,
investor relations officer/company secretary, retention of shares, happy with
corporate governance practices, performance of chairman, board, dividend,
growth of the company, CSR activities, recommendation to invest, satisfaction
with current corporate governance laws and recommendation on changes in
reporting.
cxxxviii
4.6 HYPOTHESES OF THE STUDY
A hypothesis is an assumption to be tested. The statistical testing of
hypothesis is the most important technique in statistical inference. Hypothesis
tests are widely used in business and industry for making decisions. It is here
that probability and sampling theory plays an ever-increasing role in
constructing the criteria on which business decisions are made.
1. There is no significant difference in the level of expectation of the
stakeholders’ amongst software companies with respect to the
disclosure of information to Stakeholders.
2. There is no significant difference in the level of expectation of the
stakeholders’ amongst software companies with respect to corporate
communication to Stakeholders.
3. There is no significant difference in the level of expectation of the
stakeholders’ amongst software companies with respect to the
transparency in sharing the shares allotment / borrowing information
with stakeholders
4. There is no significant difference in the level of expectation of the
stakeholders’ amongst software companies with respect to general
meeting related practices
5. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to the
disclosure of information to Stakeholders.
6. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to the
corporate communication to Stakeholders.
7. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to the
cxxxix
transparency in sharing the shares allotment / borrowing information
with stakeholders.
8. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to General
meeting related practices.
9. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to the
performance of the board.
10. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to the
corporate management practices.
11. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to financial
practices
12. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to secretarial
practices.
4.7 FRAMEWORK OF DATA ANALYSIS
To analyse the data collected on perception of stakeholders on
corporate governance practices in software companies in India, the following
statistical tools have been applied for arriving out the relevant inferences on
the data.
Statistical Tools used:
4.7.1 t Test
The t-test is the most commonly used method to evaluate the
differences in means between two groups. In this study, the t test is used to
cxl
find the difference between genders with reference to various factors of level
of expectation and level of satisfaction.
4.7.2 ANOVA
Analysis of variance is used to compare means and variability of more
than two groups. In this study, the ANOVA is used to find the difference
between age, educational qualifications, occupations, monthly income,
number of years of transactions, size of investments and corporate invested
with respect to various factors of level of expectation and level of satisfaction.
4.7.3 Mann-Whitney U Test
Mann-Whitney U test a non-parametric test which is used to compare
two groups by ranking the observations. In this study, the Mann-Whitney U
test is used to find the difference between genders with reference to various
factors of level of expectation and level of satisfaction within the company.
4.7.4 Kruskal Wallis Test
The Kruskal–Wallis one-way analysis of variance by ranks (named
after William Kruskal and W. Allen Wallis) is a non-parametric method for
testing equality of population medians among groups. It is identical to a one-
way analysis of variance with the data replaced by their ranks.. Kruskal
Wallis Test is used to compare means and variability of more than two groups.
In this study, the Kruskal Wallis Test is used to find the difference
between age, educational qualifications, occupations, monthly income,
number of years of transactions, size of investments and corporate invested
with respect to various factors of level of expectation and level of satisfaction
within the company.
cxli
4.7.5 Wilcoxon Signed Rank Test
The Wilcoxson Signed Rank Test is a non-parametric statistical
hypothesis test, used to find out any significant difference between paired
observations. In this study the test is used to compare and find out four factors
in expectation and satisfaction. The four factors studied are disclosure of
information, Corporate Communication, Transparency and General Meeting
related practices.
4.7.6 Factor Analysis
Factor analysis is a statistical method used to describe variability
among observed variables in terms of a potentially lower number of
unobserved variables called factors. In other words, it is possible, for example,
that variations in three or four observed variables mainly reflect the variations
in a single unobserved variable, or in a reduced number of unobserved
variables. Factor analysis searches for such joint variations in response to
unobserved latent variables. The observed variables are modelled as linear
combinations of the potential factors, plus "error" terms. The information
gained about the interdependencies between observed variables can be used
later to reduce the set of variables in a dataset. In this study principal
component analysis with varimax rotation is done to reduce the variables in
satisfaction into factors.
4.7.7 Bivariate Correlations
Bivariate analysis is one of the simplest forms of the quantitative
(statistical) analysis. It involves the analysis of two variables (often denoted as
X, Y), for the purpose of determining the empirical relationship between
them. In order to see if the variables are related to one another, it is common
to measure how those two variables simultaneously change together. Bivariate
cxlii
analysis can be helpful in testing simple hypotheses of association and
causality – checking to what extent it becomes easier to know and predict a
value for the dependent variable if we know a case's value on the independent
variable. Bivariate analysis can be contrasted with univariate analysis in
which only one variable is analysed. Furthermore, the purpose of a univariate
analysis is descriptive. Subgroup comparison – the descriptive analysis of two
variables – can be sometimes seen as a very simple form of bivariate analysis
(or as univariate analysis extended to two variables). The major
differentiating point between univariate and bivariate analysis, in addition to
looking at more than one variable, is that the purpose of a bivariate analysis
goes beyond simply descriptive: it is the analysis of the relationship between
the two variables.
In this study, bivariate correlation (Karl-Pearson) is done for factors of
expectation with each other, factors of satisfaction with each other and current
Indian Corporate Governance laws.
4.7.8 Structural Equation Modelling
Structural equation modelling (SEM) is a statistical technique for
testing and estimating causal relations using a combination of statistical data
and qualitative causal assumptions. This definition of SEM was articulated by
the geneticist Sewall Wright (1921), the economist Trygve Haavelmo (1943)
and the cognitive scientist Herbert Simon (1953), and formally defined by
Judea Pearl (2000) using a calculus of counterfactuals. Structural Equation
Models (SEM) allow both confirmatory and exploratory modelling, meaning
they are suited to both theory testing and theory development. Confirmatory
modelling usually starts out with a hypothesis that gets represented in a causal
model. The concepts used in the model must then be operationalized to allow
testing of the relationships between the concepts in the model. The model is
cxliii
tested against the obtained measurement data to determine how well the
model fits the data. The causal assumptions embedded in the model often have
falsifiable implications which can be tested against the data.
Modelling is done based on the factor reduction in the level of
satisfaction by principle component analysis (PCA). A proposed model will
be done using the structural equation modelling to attain satisfaction level in
corporate governance.
4.8 LIMITATIONS OF THE STUDY
The study is a sample based study and the inferences derived from the
analysis and interpretation are expected to be representative of the total
population However the study is subject to following limitations:
1. The area of the study is limited to city of Chennai, State of Tamil
Nadu, India. Hence the sample may have the limitations pertaining to
the area, tradition, custom and culture of the people in that place.
2. The respondents belong to the companies taken for study, namely
Infosys, Wipro, TCS, HCL and Satyam only, hence the data may
represent only to the above companies.
3. The survey was conducted during the first half of the year 2009, in
which the Satyam Scam came into prominence and the company was
subsequently taken over by Tech Mahindra. The study may have
impact of this.
4. The variables which directly affect the investors were taken for study,
the other variables, which also require the attention for the study of
Corporate Governance may not be included for their nature, want of
cxliv
time, awareness of the respondents, and other considerations. Hence to
that extent the study will not reflect those variables / factors.
5. As the investment in shares of companies is a volatile subject, changes
with sentiments of the people with stock market fluctuations which
may limit the study to that extent the perception of the respondents
also.
4.9 CONCLUSION
A research analysis requires a good research design to arrive at desired
results. Since the survey method needs a good sampling technique together
with proper selection of sampling area and sample size to effectively study the
population, appropriate steps were taken to ensure that a proper research
design is drawn with statistically reliable sampling with tested questionnaire.
The requisite variables were chosen for study, relevant hypotheses were set
and specific statistical tools were applied for arriving at inferences on the data.
The structural Equation Modelling technique was used to propose a model
that may be followed by software companies to achieve a higher level of the
perception of satisfaction of CG practices by stakeholders. Further the
limitations of the study are listed.
cxlv
CHAPTER - V
RESULTS AND DISCUSSIONS
INTRODUCTION
This chapter provides the details of analysis done on the data collected
and the interpretations arrived thereon. It is divided into seven major sub-
topics covering such as 5.1 Analysis of demographic variables for company-
wise, 5.2 Analysis of Expectation variables for company-wise, 5.3 Analysis of
Satisfaction Variables for company-wise, 5.4. Stakeholders’ perception on
Expectation levels in Corporate Governance practices in software companies,
5.5 Stakeholders’ perception on Satisfaction levels in Corporate Governance
practices in software companies, 5.6 Analysis of comparison of variables
between expectation, satisfaction and factors and 5.7 Modeling. The tools
such as t test, ANOVA, Mann-Whitney U test, Kruskal Wallis test, Factor
Analysis, Bivariate Correlations were used to test the hypotheses and arrive at
inference. Finally a structural equation modeling was attempted to come out
with a model to achieve good corporate governance from the perception of
stakeholders as observed from the study.
5.1 ANALYSIS OF DEMOGRAPHIC VARIABLES COMPANY WISE
The first part of the study in the questionnaire pertains to personal and
demographic details of the respondents. There were a total of eight
demographic variables, which were analyzed company wise. The various
demographic variables are gender, age, educational qualifications, occupation,
monthly income, number of years of transaction in shares, size of investment
cxlvi
and awareness about the corporate governance practices. Each variable is
analyzed as follows:
Table 5.1.1
Stakeholders Investment
Company Number of Stakeholders Percentage
Infosys 105 19.8
Wipro 103 19.4
TCS 111 20.9
HCL 107 20.2
Satyam 104 19.6
Total 530 100.0
Source: Primary Data
Table 5.1.1 indicates the investment pattern of the respondents in the
select software companies namely Infosys, Wipro, TCS, HCL and Satyam.
The percentage of respondents were of the order of 19.8, 19.4, 20.9, 20.2 and
19.6 respectively for the listed companies which indicates almost an equal
distribution of the number of respondents per company to weed out any bias
or prejudice to the sample.
cxlvii
Table 5.1.2
Gender-wise Respondents
Gender Company
Infosys Wipro TCS HCL Satyam Total
Male 86 81.9 78 75.7 73 65.8 82 76.6 85 81.7 404 76.2
Female 19 18.1 25 24.3 38 34.2 25 23.4 19 18.3 126 23.8
Total 105 100 103 100 111 100 107 100 104 100 530 100
Source: Primary Data, bold figure indicates Percentage
Table 5.1.2 shows that how the gender distributed to various companies
under study. The percentage of male and female stakeholders are distributed
company–wise as 81.9 and 18.1 for Infosys, 75.7 and 24.3 for Wipro, 65.8 and
34.2 in TCS, 76.6 and 23.4 in HCL and 81.7 and 18.3 in Satyam. Highest
number of male stakeholders is found in Infosys and lowest with TCS;
whereas highest female stakeholders are with TCS and lowest with Infosys.
Table 5.1.3
Age-wise Respondents
Age Company
Infosys Wipro TCS HCL Satyam Total
25-35 years 16 15.2 18 17.5 21 18.9 17 15.9 23 22.1 95 17.9
36-45 years 27 25.7 24 23.3 24 21.6 27 25.2 28 26.9 130 24.5
46-55 years 36 34.3 33 32 35 31.5 29 27.1 29 27.9 162 30.6
Above 55
years 26 24.8 28 27.2 31 27.9 34 31.8 24 23.1 143 27
Total 105 100 103 100 111 100 107 100 104 100 530 100
Source: Primary Data, bold figure indicates Percentage
Table 5.1.3 illustrates the age distribution of respondents company-
wise. Four age groups were identified, namely 25-35years, 36-45, 46-55 and
cxlviii
above 55years for the study. 25-35 years age group respondents are very high
in Satyam whereas very low in Infosys, high, moderate and low in TCS,
Wipro and HCL respectively. In the case of 36-45 years, the very high to very
low was of the order of Satyam, Infosys, HCL, Wipro and TCS. For the age-
group 46-55years, the very high to very low respondent distribution was
Infosys, Wipro, TCS, Satyam and HCL, but for above 55 years it was HCL
followed by TCS, Wipro, Infosys and Satyam.
Table 5.1.4
Educational Qualifications – wise Respondents
Edu.Quali-
fication
Company
Infosys Wipro TCS HCL Satyam Total
School level 11 10.5 9 8.7 8 7.2 9 8.4 12 11.5 49 9.2
Graduate 23 21.9 25 24.3 28 25.2 28 26.2 29 27.9 133 25.1
Post -
Graduate 29 27.6 28 27.2 33 29.7 31 29 28 26.9 149 28.1
Professionals 42 40 41 39.8 42 37.8 39 36.4 35 33.7 199 37.5
Total 105 100 103 100 111 100 107 100 104 100 530 100
Source: Primary Data, bold figure indicates Percentage
Table 5.1.4 depicts the educational qualifications of the respondents
company-wise. The distribution of school level respondents from very high to
very low was Satyam, Infosys, Wipro, HCL and TCS respectively. Graduate
respondents were distributed in the above order was of Satyam, HCL, TCS,
Wipro and Infosys. Post graduates and Professionals were distributed as TCS,
HCL, Infosys, Wipro, Satyam and Infosys, Wipro, TCS, HCL and Satyam
respectively.
cxlix
Table 5.1.5
Occupation – wise Respondents
Occupation Company
Infosys Wipro TCS HCL Satyam Total
Business 21 20 19 18.4 18 16.2 16 15 23 22.1 97 18.3
Private 37 35.2 37 35.9 34 30.6 35 32.7 41 39.4 184 34.7
Public 33 31.4 31 30.1 36 32.4 32 29.9 29 27.9 161 30.4
Government 14 13.3 16 15.5 23 20.7 24 22.4 11 10.6 88 16.6
Total 105 100 103 100 111 100 107 100 104 100 530 100
Source: Primary Data, bold figure indicates Percentage
Table 5.1.5 denotes the occupation of the
respondents of various companies. Basically the
respondents belong to four categories, namely business,
private, public and government. The distribution of
business respondents was very high in Satyam and very
low in HCL with high, moderate and low in the order of
Infosys, Wipro and TCS respectively. In the case of
respondents belonging to private category from very
high to very low was distributed to Satyam, Wipro,
Infosys, HCL and TCS. The respondents belonging to
public were distributed as TCS, Infosys, Wipro, HCL
and Satyam whereas respondents from government
occupation were spread across HCL, TCS, Wipro,
Infosys, and Satyam from very high to very low.
cl
Table 5.1.6
Income – wise Respondents
Monthly
Income
Company
Infosys Wipro TCS HCL Satyam Total
Below
Rs.14,999 11 10.5 13 12.6 12 10.8 11 10.3 14 13.5 61 11.5
Rs.15,000 to
Rs.24,999 13 12.4 11 10.7 14 12.6 12 11.2 13 12.5 63 11.9
Rs.25,000 to
Rs.44,999 24 22.9 21 20.4 28 25.2 25 23.4 38 36.5 136 25.7
Rs.45,000 to
Rs.64,999 22 21 38 36.9 42 37.8 41 38.3 14 13.5 157 29.6
Above
Rs.65,000 35 33.3 20 19.4 15 13.5 18 16.8 25 24 113 21.3
Total 105 100 103 100 111 100 107 100 104 100 530 100
Source: Primary Data, bold figure indicates Percentage
Table 5.1.6 narrates the spread of respondents with different monthly
income in different companies. There are five categories of month-income
earners, namely income less than Rs 14,999 per month, Rs 15,000-24,999, Rs
25,000-44,999, Rs 45,000-64,999 and above Rs 65,000. The spread of first
category, less than Rs 14,999 was Satyam, Wipro, Infosys, HCL, and TCS
from very high to very low respectively. In the case of salary range of Rs
15,000-24,999, it was TCS, Satyam, Infosys, HCL and Wipro. For third
category, the spread was Satyam, TCS, HCL, Infosys and Wipro. The fourth
one was spanned across HCL, TCS, and Wipro. Infosys and Satyam and the
category of above Rs 65,000 was of the order of Infosys, Satyam, Wipro,
HCL and TCS.
cli
Table 5.1.7
Awareness of Corporate Governance
Company Awareness of Corporate Governance
Total Yes No
Infosys 71 34 105
67.6 32.4 100
Wipro 64 39 103
62.1 37.9 100
TCS 59 52 111
53.2 46.8 10
HCL 62 45 107
57.9 42.1 100
Satyam 55 49 104
52.9 47.1 100
Total 311 219 530
58.7 41.3 100
Source: Primary Data, bold figure indicates Percentage
Table 5.1.7 illustrates the level of respondents’
awareness towards corporate governance practices in
various companies. The respondents who aware of
corporate governance practices were very high in
Infosys, followed by Wipro, HCL, TCS, and Satyam
respectively whereas those who were not aware of such
practices were very high in Satyam followed by TCS,
HCL, Wipro and Infosys. The study indicates that the
Infosys stakeholders were more aware of the practices
and Satyam stakeholders were least aware of the
corporate governance.
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Table 5.1.8
Number of years of transaction in stocks
Company
Number of years of transaction in shares
Total 1-2.11
years
3 - 5.11
years
6 - 8.11
years
Above 9
years
Infosys 19 40 25 21 105
18.1 38.1 23.8 20.0 100
Wipro 35 33 18 17 103
34.0 32.0 17.5 16.5 100
TCS 39 41 19 12 111
35.1 36.9 17.1 10.8 100
HCL 35 43 15 14 107
32.7 40.2 14.0 13.1 100
Satyam 33 46 14 11 104
31.7 44.2 13.5 10.6 100
Total 161 203 91 75 530
30.4 38.3 17.2 14.2 100
Source: Primary Data, bold figure indicates Percentage
Table 5.1.8 depicts the number of years of transactions in shares in
various companies by respondents. Basically four categories of transaction
periods were identified, with ranges as 1-2.11 years, 3-5.11, 6-8.11 and above
9 years. The first category has a spread of TCS, Wipro, HCL, Satyam and
Infosys from very high to very low respectively. The second category of 3-
5.11 years was spread across from Satyam, HCL, Infosys, TCS and Wipro
with very high to very low respectively. In the case of 6-8.11 years, the
spread was Infosys, Wipro, TCS, HCL and Satyam whereas above 9 years
spanned across Infosys, Wipro, HCL, TCS and Satyam in the order of very
high to very low.
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Table 5.1.9
Size of Investments
Company
Size of investments
Total Rs.10,000 -
Rs.24,999
Rs. 25,000 -
Rs. 99,999
Above
Rs.1,00,000
Infosys 0 16 89 105
0 15.2 84.8 100
Wipro 0 19 84 103
0 18.4 81. 100
TCS 14 32 65 111
12.6 28.8 58.6 100
HCL 12 28 67 107
11.2 26.2 62.6 100
Satyam 18 34 52 104
17.3 32.7 50.0 100
Total 44 129 357 530
8.3 24.3 67.4 100
Source: Primary Data, bold figure indicates Percentage
Table 5.1.9 narrates the size of investments held by
the respondents. There were three sizes of investments
identified namely, Rs 10. 000-24,999, 25,000-99,999
and Rs 1 lakh and above. In the first category, the
investments were of the magnitude with very high at
Satyam followed by TCS and HCL, No investments
were reported for Infosys and Wipro. In the category of
Rs 25,000-99,999 the spread of very high to very low
was Satyam, TCS, HCL, Wipro and Infosys. The Rs 1
lakh and above category has a spread of starting with
Infosys followed by Wipro, HCL, TCS and Satyam.
This illustrates that the size of investments were made in
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Infosys were high by individual respondents and very
low size investments at Satyam. 5.2 ANALYSIS OF EXPECTATION VARIABLES FOR COMPANY-
WISE
The second part of the study contains the perception of the stakeholders
on expectation towards corporate governance practices. There are in total
twenty four variables studied. The expectation variables studied are,
disclosure of income & expenditure, actual profitability, actual risk, dividend
declaration, investor relations, grievance resolution, bonus shares declaration,
cash dividend, property and paper dividend, growth information, winding up
status, financial transactions, corporate communication of allotment, issue and
transfer of shares, transparency of share allotment, borrowing loan, accessing
minutes of AGM and getting copies thereof, appointment of
directors/auditors, calling for AGM, demand for poll, inspection of books of
accounts / records and suing the officers of the company on wrongful acts.
The details of the analysis are as follows:
Table 5.2.1
Mean & Standard deviation for the Expectation variables
S.
No
Expectation
Variable
Infosys Wipro TCS HCL Satyam
Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D.
1. Disclosure of
Income and
Expenditure 4.71 0.5 4.78 0.4 4.76 0.4 4.81 0.4 4.806 0.4
2. Disclosure of
Actual
Profitability 4.71 0.5 4.63 0.5 4.65 0.5 4.61 0.5 4.605 0.49
3. Disclosure of
Actual Risk 4.78 0.4 4.79 0.4 4.76 0.4 4.78 0.4 4.75 0.44
4. Dividend
Declaration 4.82 0.4 4.59 0.5 4.63 0.5 4.76 0.4 4.76 0.43
5. Investor
Relations 4.71 0.5 4.81 0.4 4.46 0.5 4.81 0.4 4.8 0.4
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6. Grievance
Resolution 4.83 0.4 4.84 0.4 4.53 0.7 4.79 0.4 4.81 0.4
7. Bonus shares
declaration 4.71 0.5 4.71 0.5 4.43 0.5 4.78 0.4 4.73 0.45
8. Cash Dividend 4.82 0.4 4.81 0.4 4.39 0.5 4.87 0.3 4.86 0.35
9. Property and
Paper Dividend 4.58 0.5 4.64 0.5 4.37 0.5 4.55 0.5 4.54 0.5
10. Growth
Information 4.68 0.5 4.51 0.5 4.72 0.5 4.54 0.5 4.49 0.5
11. Winding Up
Status 1.13 0.3 1.25 0.4 1.3 0.5 1.19 0.4 1.22 0.41
12. Financial
Transactions 4.82 0.4 4.73 0.5 4.79 0.4 4.82 0.4 4.84 0.37
13. Corporate
Communication
of Allotment of
shares 4.71 0.5 4.64 0.5 4.62 0.5 4.72 0.5 4.71 0.46
14. Corporate
Communication
of Share
certificates issue 4.67 0.5 4.71 0.5 4.69 0.5 4.72 0.5 4.69 0.46
15. Corporate
Communication
of Transfer of
Shares 4.83 0.4 4.79 0.4 4.76 0.4 4.78 0.4 4.75 0.43
16. Transparency of
Share Allotment 4.77 0.4 4.64 0.5 4.66 0.5 4.63 0.5 4.58 0.5
17. Transparency of
Borrowing loan /
loan capital 4.7 0.5 4.73 0.5 4.66 0.5 4.73 0.5 4.73 0.45
18. Minutes of
AGM 4.7 0.5 4.91 0.3 4.91 0.3 4.84 0.4 4.88 0.33
19. Copies of
Minutes 4.89 0.3 4.92 0.3 4.94 0.2 5 0 4.98 0.15
20. Appointment of
Directors/
Auditors 4.72 0.5 4.72 0.5 4.68 0.5 4.68 0.5 4.62 0.49
21. Calling for
EGM 4.79 0.4 4.99 0.1 4.95 0.2 4.92 0.3 4.94 0.23
22. Demand for Poll 4.73 0.4 4.64 0.5 4.65 0.5 4.67 0.5 4.69 0.46
23. Inspection of
books of
accounts/records 4.76 0.4 4.63 0.5 4.65 0.5 4.69 0.5 4.65 0.48
24. Suing on
wrongful acts 4.72 0.5 4.72 0.5 4.68 0.5 4.63 0.5 4.59 0.49
Source: Primary Data
clvi
In order to find out that is there any significance of difference between
stakeholders’ expectation in the selected five software companies namely
Infosys, Wipro, TCS, HCL and Satyam, mean and standard deviations were
used. The result infers that all the five selected software companies
stakeholders’ expectation on disclosure of income and expenditure was very
high for all five companies (mean value is more than 4.75), The expectation
of disclosure of actual profitability was high (mean value is 4.63) . The
expectation of disclosure of actual risk was very high (mean value is 4.76).
The expectation of dividend declaration was very high in Infosys, HCL and
Satyam (mean value is 4.76) and high in Wipro and TCS (mean value is 4.61).
The expectation of investor relations and grievance resolution was very high
(mean value is 4.8) on Infosys, Wipro TCS HCL and Satyam and it is high
in TCS (mean value is 4.5).
The expectation on bonus declaration was very high (mean value is
4.73) on all companies namely Infosys, Wipro, HCL and Satyam but it was
high in TCS (mean value is 4.43). The expectation on cash dividend was very
high on four companies, namely Infosys, Wipro, HCL and Satyam (mean
value is 4.81) and it was high in TCS (mean value is 4.39). The expectation
of property and paper dividend is high in all companies (mean value is 4..55).
The expectation on growth information was high in all companies (mean
value is 4.54). As far as the expectation of winding up information is
concerned it was very low (mean value is 1.19). The expectation of financial
transaction information is uniformly very high in all companies (mean value is
4.82). The expectation on corporate communication on share allotment, share
issue were uniformly high in all companies (mean value is 4.71) . However
the expectation of corporate communication on share transfer it was very high
in all companies (mean value is 4.79). The expectation on transparency of
share allotment was high in all companies (mean value is 4.63) except Infosys
clvii
in which it was very high (mean value is 4.77). The expectation on
transparency of loan capital is high in all companies (mean value is 4.73).
The expectation on access to minutes and copies thereof was very high for all
companies (mean value is 4.88) and copies thereof (mean value is 4.94). The
expectation on appointment of directors / auditors by stakeholders in Annual
General Meeting was high in all the companies (mean value is 4.68). The
expectation on calling an Extra-ordinary General Meeting was very high in all
the companies (mean value is 4.95), wherein demand for poll was high.
(mean value 4.67). The expectation of inspection of books of accounts was
high (mean value is 4.65) in all companies except Infosys in which it was very
high (mean value is 4.76) and suing the officers of the company for wrongful
acts was uniformly high in all companies (mean value is 4.68)..
5.3 ANALYSIS OF SATISFACTION VARIABLES FOR
COMPANY-WISE
The third part of the study contains the perception of the stakeholders
on satisfaction towards corporate governance practices. There are in total
thirty nine variables studied. The satisfaction variables studied are, disclosure
of income & expenditure, actual profitability, actual risk, dividend
declaration, investor relations, grievance resolution, bonus shares declaration,
cash dividend, property and paper dividend, growth information, winding up
status, financial transactions, corporate communication of allotment, issue and
transfer of shares, transparency of share allotment, borrowing loan, accessing
minutes of AGM and getting copies thereof, appointment of
directors/auditors, calling for AGM, demand for poll, inspection of books of
accounts / records, suing the officers of the company on wrongful acts,
composition and performance of BOD, performance of chairman, leadership,
investor relations officer/company secretary, retention of shares, happy with
corporate governance practices, performance of chairman, board, dividend,
clviii
growth of the company, CSR activities, recommendation to invest, satisfaction
with current corporate governance laws and recommendation on changes in
reporting. The details of the analyses are as follows:
Table 5.3.1
Mean & Standard Deviation for Satisfaction variables
S.
No
Satisfaction
Variable
Infosys Wipro TCS HCL Satyam
Mean S.D. Mean S.D. Mean S.D. Mean S.D. Mean S.D.
1. Disclosure of
Income and
Expenditure 4.8 0.4 4.76 0.4 4.54 0.5 4.64 0.5 3.29 0.9
2. Disclosure of
Actual
Profitability 4.8 0.4 4.91 0.3 4.37 0.5 4.23 0.5 2.84 0.8
3. Disclosure of
Actual Risk 4.76 0.4 4.82 0.4 4.35 0.5 4.1 0.5 2.88 0.7
4. Dividend
Declaration 4.92 0.3 5 0 4.63 0.5 4.05 0.4 3.15 0.5
5. Investor
Relations 5 0 4.9 0.3 4.46 0.5 4.31 0.6 2.81 0.9
6. Grievance
Resolution 4.88 0.3 4.76 0.4 4.53 0.7 3.86 0.4 2.38 0.7
7. Bonus shares
declaration 4.92 0.3 4.91 0.3 4.43 0.5 4.33 0.6 2.94 0.8
8. Cash Dividend 4.92 0.3 4.91 0.3 4.39 0.5 4.4 0.5 3.06 0.8
9. Property and
Paper Dividend 4.84 0.4 4.9 0.3 4.37 0.5 4.22 0.7 2.64 0.9
10. Growth
Information 5 0 4.82 0.4 4.72 0.5 4.23 0.5 2.58 0.9
11. Winding Up
Status 1 0 1 0 1.46 0.5 1.45 0.5 2.4 0.7
12. Financial
Transactions 4.92 0.3 5 0 4.54 0.5 4.29 0.5 1.73 1.2
13. Corporate
Communication
of Allotment of
shares 5 0 5 0 4.46 0.5 4.37 0.6 2.85 0.9
14. Corporate
Communication
of Share
certificates issue 4.88 0.3 5 0 4.72 0.5 4.27 0.6 2.78 0.8
clix
15. Corporate
Communication
of Transfer of
Shares 5 0 5 0 4.63 0.5 4.21 0.6 2.88 0.9
16. Transparency
of Share
Allotment 4.76 0.4 4.81 0.4 4.56 0.5 4 0 3 0.7
17. Transparency
of Borrowing
loan / loan
capital 5 0 4.91 0.3 4.63 0.5 4.36 0.5 3.15 0.7
18. Minutes of
AGM 4.72 0.5 4.81 0.4 4.91 0.3 4.65 0.6 2.86 1
19. Copies of
Minutes 4.88 0.3 4.75 0.4 4.81 0.4 4.4 0.6 2.87 0.9
20. Appointment of
Directors/
Auditors 4.92 0.3 4.91 0.3 4.55 0.5 4.13 0.5 2.52 0.8
21. Calling for
EGM 5 0 5 0 4.46 0.5 4.05 0.4 2.58 0.8
22. Demand for
Poll 4.84 0.4 4.9 0.3 4.52 0.5 4.55 0.5 2.84 0.9
23. Inspection of
books of
accounts /
records 5 0 4.91 0.3 4.89 0.3 4.26 0.4 2.82 0.8
24. Suing on
wrongful acts 4.88 0.3 4.82 0.4 4.83 0.4 4.27 0.5 2.85 0.8
25. Composition of
BOD 4.84 0.4 5 0 4.89 0.3 3.96 0.5 2.73 0.8
26. Performance of
Chairman 4.8 0.4 4.84 0.4 4.46 0.5 4.35 0.6 2.96 0.8
27. Performance of
BOD 4.8 0.4 4.9 0.3 4.63 0.5 4.42 0.6 1.95 1.2
28. Performance of
Leadership 4.8 0.4 4.81 0.4 4.79 0.4 4.21 0.5 1.76 1.2
29. Performance of
Investor
Relations
Officer/Compan
y Secretary 4.72 0.5 4.72 0.5 4.72 0.5 4.37 0.6 2.62 0.9
30. Retention of
Shares 4.92 0.3 4.83 0.4 4.71 0.5 4.19 0.4 1.76 1.2
clx
31. Happy with
Corporate
Governance 4.84 0.4 4.9 0.3 4.91 0.3 4.15 0.6 2.36 0.9
32. Happy with
Performance of
Chairman 4.84 0.4 4.82 0.4 4.72 0.5 4.15 0.6 2.91 0.8
33. Happy with
Performance of
BOD 4.8 0.4 4.84 0.4 4.55 0.5 4.07 0.6 2.52 0.9
34. Happy with
Dividend 4.92 0.3 5 0 4.54 0.5 4.32 0.6 2.59 0.9
35. Happy with
Growth of
Company 5 0 5 0 4.72 0.5 4.72 0.7 2.48 1.2
36. Happy with
CSR activities 5 0 4.91 0.3 4.81 0.4 3.94 0.2 3.39 0.5
37. Recommenda-
tions to invest 3 0 2.9 0.3 2.63 0.5 2.55 0.5 1.65 0.7
38. Satisfied with
the current CG
laws 4.8 0.4 4.56 0.5 4.27 0.5 3.95 0.5 2.17 1
39. Recommenda-
tion on changes
in reporting 2 0 2 0 2 0 1.94 0.2 1.16 0.4
Source: Primary Data
The statistical tools, such as mean and standard deviation were used to
find out that, is there any significance of difference between the perception of
stakeholders’ satisfaction in selected five software companies. The study
reveals that the perception of the satisfaction on disclosure of income and
expenditure was very high in Infosys and Wipro (mean value is 4.76), high in
TCS and HCL (mean value is 4.54)and moderate in Satyam (mean value is
3.29). The satisfaction of disclosure of actual profitability was high in Wipro
and Infosys ( 4.8), low in TCS and HCL (4.23) and low in Satyam (2.84),
wherein actual risk, it was very high in Wipro and Infosys ( 4.76), high in
TCS and HCL (4.1) and low in Satyam (2.88). The perception of the
satisfaction of dividend declaration was high in Wipro, and Infosys (4.92),
clxi
high in TCS and HCL (4.05 and moderate in Satyam(3.15). The perception of
the satisfaction of investor relations was very high in Infosys and Wipro (4.9),
high in TCS and HCL (4,31) and low in Satyam (2.81). The perception of the
satisfaction of grievance resolution was very high in Infosys and Wipro(4.76),
high in TCS (4.53) , moderate in HCL (3.86 ) and low in Satyam(2.38). The
perception of the satisfaction of bonus shares, was very high in Infosys and
Wipro(4.91), moderate in TCS and HCL (4.33) and low (2.94)in Satyam. The
perception of the satisfaction of cash dividend was very high in Infosys and
Wipro (4.91), high in TCS and HCL (4.39) and moderate in Satyam (3.06).
The perception of the satisfaction of property and paper dividend was very
high in Infosys and Wipro (4.84), high in TCS and HCL (4.22) and low in
Satyam (2.64). As far as the perception of satisfaction of growth information
is concerned, all the three companies namely Infosys, Wipro and TCS were
very high (4.82), HCL was moderate (4.23) and Satyam was low (2.58). In
the case of perception of satisfaction of winding up, Infosys and Wipro were
very low (1.0), HCL and TCS ((1.45)were low and Satyam was moderate
(2.4).
The perception of the satisfaction of financial transactions was very
high in Wipro and Infosys, (4.92), high in TCS and HCL (4.29) and very low
in Satyam (1.73). In the case of perception of satisfaction of corporate
communication of share allotment, it was very high for Infosys and Wipro
(5.0), high in TCS and HCL (4,37) and low in Satyam (2.85). The perception
of the satisfaction of issue of share certificate is very high in Wipro, Infosys
and TCS (4.88), high in HCL (4.27) and moderate in Satyam (2.78). The
perception of the satisfaction of share transfer is very high in Infosys and
Wipro (5.0), high in TCS and HCL (4.21) and low in Satyam (2.88). In the
case of perception of satisfaction of transparency of share allotment, it is very
high in Wipro and Infosys, followed by TCS and HCL as high (4.0) and
clxii
Satyam was moderate (3.0). The perception of the satisfaction of
transparency of loan capital is very high in Infosys and Wipro (4.91), high in
TCS and HCL (4.36) and moderate in Satyam (3.15). The perception of the
satisfaction of access to minutes of AGM is very high in TCS and Wipro
(4.81) high in Infosys and HCL (4.65), low in Satyam (2.86). The perception
of the satisfaction of taking copies of the minutes of AGM is very high in
Infosys, TCS and Wipro (4.81), high in HCL (4.4) and low in Satyam (2.87).
As far as the perception of satisfaction of appointment of Directors/Auditors,
it is very high in Infosys and Wipro (4.91) high in TCS and HCL (4.13), and
low in Satyam (2.52). In the case of perception of satisfaction of calling an
EGM, it is very high in Infosys and Wipro (5.0), TCS and HCL (4.05) and
low in Satyam (2.58).
The perception of the satisfaction of demanding a poll is very high in
Wipro and Infosys (4.84), high in HCL and TCS (4.52) and low in Satyam
(2.84). The perception of the satisfaction of inspection of books of
accounts/records is very high in Infosys, Wipro and TCS (4.91), high in HCL
(4.26) and low in Satyam (2.82). In the case of perception of satisfaction of
suing the officers of the company on wrongful acts, it is very high in Infosys,
TCS and Wipro (4.83), high in HCL (4.27) and low in Satyam (2.85). In the
case of perception of satisfaction of composition of BODs, it was very high in
Wipro, TCS and Infosys (4.89), moderate in HCL (3.96) and low in Satyam
(2.85). The perception of the satisfaction of performance of chairman, it is
very high in Wipro and Infosys (4.8), high in TCS and HCL (4.35) and low in
Satyam (2.96). The perception of the satisfaction of performance of BOD it
is very high in Wipro and Infosys (4..8), TCS and HCL (4.42) and very low in
Satyam (1.95). The satisfaction of performance of leadership it is very high in
Wipro, Infosys and TCS, (4.8) high in HCL (4.21) and very low in Satyam
(1.76).
clxiii
In the case of satisfaction of performance of investor relations officer /
company secretary s it was very high in all the three companies, namely
Infosys, Wipro and TCS (4.72), high in HCL (4.37) and low in Satyam (2.62).
The satisfaction of retention of shares is very high in Infosys, Wipro and TCS
(4.83), high in HCL (4.19) and very low in Satyam (1.76). As far as the
satisfaction of corporate governance practices for retention of shares , it was
high for TCS, Wipro and Infosys (4.84), high for HCL (4.15) and low in
Satyam(2.36). The satisfaction of performance of the chairman for retention
of shares was very high in Infosys, Wipro, and TCS (4.82) high in HCL (4.15)
and low in Satyam (2.91). In the case of satisfaction of performance of the
BOD for retention of shares, it is Wipro and Infosys (4.8), high in TCS and
HCL (4.07) and low in Satyam (2.52). The satisfaction of dividend
declaration for retention of shares is very high in Wipro and Infosys (4.92),
high in TCS and HCL (4.32) and low in Satyam (2.59). In the case of
satisfaction of growth of the company for retention of shares, it is very high in
Infosys, Wipro (5.0), high in TCS and HCL (4.72) and low in Satyam (2.48).
The satisfaction of corporate social responsibilities activities are concerned, it
was very high in Infosys, Wipro and TCS (4.91), low in HCL and Satyam
(339). The satisfaction of recommending to invest by others in their
companies, it was moderate in Infosys (3.0), low in Wipro, TCS and HCL
(2.63) and very low in Satyam (1.65). The satisfaction of current corporate
governance laws was very high in Infosys (4.8) high in Wipro and TCS (4.27)
moderate in HCL (3.95) and low in Satyam (2.17). The satisfaction of
recommendations to change the reporting was low in Infosys, Wipro and TCS
(2.0), very low in HCL and Satyam (1.16).
5.4 STAKEHOLDERS’ PERCEPTION ON EXPECTATION LEVELS
IN CORPORATE GOVERNANCE PRACTICES IN SOFTWARE
COMPANIES
clxiv
5.4.1 Analysis of level of expectation in Disclosure of information to
Stakeholders
Null hypothesis Ho-1: There is no significant difference in the level of
expectation of the stakeholders’ amongst software companies with respect to
the disclosure of information to Stakeholders.
Table 5.4.1
ANOVA for significant difference between Software Companies & the
level of stakeholders expectation of Disclosure of information
Company Mean S.D F p-value
Infosys 14.21 0.78
0.063 .993
Wipro 14.19 0.77
TCS 14.16 0.79
HCL 14.20 0.78
Satyam 14.17 0.81
Source : Primary Data
In order to find out that there is any difference between software
companies by stakeholders and expectation in disclosure of information of
selected five software companies, the ANOVA test was used to find out the
significant difference between two variables. Since the p value is greater than
0.05, the null hypothesis is accepted at 5% level of significance, hence there is
no significant difference between level of expectation of stakeholders and
disclosure of information of selected software companies.
Table 5.4.2
t-test for Gender with respect to level of expectation in Disclosure of
information to Stakeholders
Gender Mean S.D t p-value
Male 14.15 0.78 2.152 0.032
clxv
Female 14.32 0.79
Source: Primary Data, Shaded figures indicates significance
In order to find out that there is any difference between gender with
respect to the level of expectation by stakeholders and expectation in
disclosure of information of selected five software companies, the t test was
used to find out the significance of difference between two variables. Since
the p value (0.032) is lesser than the (0.05), there is significant difference
between gender of stakeholders and disclosure of information of selected
software companies.. Means in the above table shows females’ expectations
are more compared to males.
Table 5.4.3
ANOVA for Educational Qualifications with respect to level of
expectation of disclosure of information
Educational Qualifications Mean S.D F p-value
School level 14.12 0.86
0.518 0.67 Graduate 14.26 0.72
Post-Graduate 14.16 0.79
Professionals 14.18 0.80
Source: Primary Data
In order to analyse that there is any difference between educational
qualifications of the stakeholders and expectation in disclosure of information
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.67) is
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and disclosure of information of selected
software companies.
clxvi
Table 5.4.4
ANOVA for Size of Investment with respect to level of expectation in
Disclosure of information to Stakeholders
Size of Investment Mean S.D F p-value
Rs.10,000 - Rs.24,999 14.20 0.82
0.142 0.868 Rs. 25,000 - Rs. 99,999 14.16 0.81
Above Rs.1,00,000 14.20 0.77
Source: Primary Data
In order to find out that there is any difference between size of
investments of stakeholders and expectation in disclosure of information of
selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.868) is
greater than the (0.05), there is no significant difference between size of
investments of stakeholders and disclosure of information of selected software
companies.
Table 5.4.5
Kruskal Wallis & Mann-Whitney U test for significant difference for
gender, educational qualifications and size of investments with respect to
expectation in disclosure of information to stakeholders
Compa
ny Variables p-value
Infosys
Gender 0.929
Educational Qualifications 0.469
Size of Investment 0.444
Wipro
Gender
0.817
Educational Qualifications 0.527
Size of Investment 0.26
TCS
Gender 0.035
Educational Qualifications 0.274
clxvii
Size of Investment 0.687
HCL
Gender 0.227
Educational Qualifications 0.867
Size of Investment 0.971
Satyam
Gender 0.029
Educational Qualifications 0.028
Size of Investment 0.992
Source: Primary Data, Shaded figures indicates significance
In order to analyse out that there is any difference among gender,
educational qualifications and size of investments of stakeholders of
stakeholders and expectation in disclosure of information of selected five
software companies, the Kruskal Wallis & Mann-Whitney U test were used to
find out the significance of difference among variables. Since the calculated
values (0.035), (0.029) and (0.028) are lesser than the table value (0.05),
there is significant difference among gender, educational qualifications and
size of investments of stakeholders and disclosure of information of selected
software companies. Significant difference is observed between genders in
TCS and Satyam. Also significant difference is observed between educational
qualifications in Satyam with respect to level of expectation in disclosure of
information to stakeholders.
5.4.2 Analysis of level of expectation in Corporate Communication
Null hypothesis Ho-2: There is no significant difference in the level of
expectation of the stakeholders’ amongst software companies with respect to
corporate communication to Stakeholders.
Table 5.4.6
ANOVA for significant difference between Software Companies & the
level of stakeholders expectation of Corporate Communication
clxviii
Company Mean S.D F p-value
Infosys 14.21 0.80
Wipro 14.14 0.84
TCS 14.07 0.83 0.563 0.689
HCL 14.22 0.79
Satyam 14.14 0.83
Source : Primary Data
In order to find out that there is any difference between software
companies by stakeholders and expectation in corporate communication of
selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.689) is
greater than the (0.05), hence there is no significant difference between level
of expectation of stakeholders and corporate communication of selected
software companies and the null hypothesis is accepted.
Table 5.4.7
ANOVA for Educational Qualifications with respect to level of
expectation in Corporate Communication to Stakeholders
Educational
Qualifications Mean S.D F p-value
School level 14.04 0.87
1.132 0.335 Graduate 14.23 0.78
Post – Graduate 14.09 0.80
Professionals 14.18 0.84
Source: Primary Data
In order to find out that there is any difference between educational
qualifications of the stakeholders and expectation in corporate communication
of selected five software companies, the ANOVA test was used to find out the
clxix
significance of difference between two variables. Since the p value (0.335) is
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and corporate communication of selected
software companies.
Table 5.4.8
ANOVA for Occupation with respect to Corporate
Communication to Stakeholders
Occupation Mean S.D F p-value
Business 14.25 0.83
0.786
0.502
Private 14.09 0.81
Public 14.16 0.82
Government 14.17 0.81
Source: Primary Data
In order to analyse that there is any difference between occupation of
the stakeholders and expectation in corporate communication of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.502) is greater than the
(0.05), there is no significant difference between occupation of stakeholders
and corporate communication of selected software companies.
Table 5.4.9
ANOVA for Size of Investment with respect to level of expectation in
Corporate Communication to Stakeholders
Size of Investment Mean S.D F p-value
Rs.10,000 - Rs.24,999 14.09 0.77
0.254
0.776
Rs. 25,000 - Rs. 99,999 14.13 0.84
Above Rs.1,00,000 14.17 0.82
clxx
Source: Primary Data
In order to find out that there is any difference between size of
investments of the stakeholders and expectation in corporate communication
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.776) is
greater than the (0.05), there is no significant difference between size of
investments of stakeholders and corporate communication of selected
software companies.
Table 5.4.10
Kruskal Wallis test for significant difference among educational
qualification, occupation & size of investment & level of expectation of
Stake holders in Corporate Communication
Company Variables p-value
Infosys Educational Qualifications 0.178
Occupation 0.897
Size of Investment 0.246
Wipro Educational Qualifications 0.235
Occupation 0.987
Size of Investment 0.102
TCS Educational Qualifications 0.875
Occupation 0.273
Size of Investment 0.281
HCL Educational Qualifications 0.309
Occupation 0.677
Size of Investment 0.546
Satyam Educational Qualifications 0.101
Occupation 0.322
clxxi
Size of Investment 0.753
Source: Primary Data
In order to analyse out that there is any difference among educational
qualifications, occupation and size of investments of stakeholders of
stakeholders and expectation in corporate communication of selected five
software companies, the Kruskal Wallis test is used to find out the
significance of difference among variables. Since the p values given in the
table above are greater than the (0.05), there is no significant difference
among educational qualifications, occupation and size of investments of
stakeholders and corporate communication of selected software companies.
5.4.3 Analysis of level of expectation in Transparency
Null hypothesis Ho-3: There is no significant difference in the level of
expectation of the stakeholders’ amongst software companies with respect to
the transparency in sharing the shares allotment / borrowing information with
stakeholders.
Table 5.4.11
ANOVA for significant difference between Software companies & level of
Stakeholders expectation of Transparency
Company Mean S.D F p-value
Infosys 9.47 0.50
1.991
0.095
Wipro 9.37 0.48
TCS 9.32 0.47
HCL 9.36 0.48
Satyam 9.30 0.46
clxxii
Source: Primary Data
In order to find out that there is any difference between software
companies by stakeholders and expectation in transparency of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.095) is greater than the
(0.05), hence there is no significant difference between level of expectation of
stakeholders and transparency in sharing the shares allotment / borrowing
information with stakeholders of selected software companies and the null
hypothesis is accepted.
Table 5.4.12
ANOVA for significant difference in Educational Qualifications & the
level of stakeholders’ expectation of Transparency
Educational Qualifications Mean S.D F p-value
School level 9.35 0.48
0.445 0.721
Graduate 9.36 0.48
Post - Graduate 9.40 0.49
Professionals 9.34 0.47
Source: Primary Data
In order to find out that there is any difference between educational
qualifications of the stakeholders and expectation in transparency of selected
five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.721) is
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and transparency in sharing the shares allotment
/ borrowing information with stakeholders of selected software companies.
clxxiii
Table 5.4.13
Kruskal Wallis test for significant difference in educational qualifications
& the level of expectation in Transparency.
Company Variables p-value
Infosys Educational Qualifications 0.329
Wipro Educational Qualifications. 0.568
TCS Educational. Qualifications 0.488
HCL Educational. Qualifications 0.237
Satyam Educational. Qualifications 0.229
Source: Primary Data
In order to analyse out that there is any difference between educational
qualifications of stakeholders of stakeholders and transparency of selected
five software companies, the Kruskal Wallis test was used to find out the
significance of difference between variables. Since the p values given in the
above table are greater than the (0.05), there is no significant difference
between, educational qualifications of stakeholders and transparency of
selected software companies.
5.4.4 Analysis of level of expectation in General meeting
Null hypothesis Ho-4: There is no significant difference in the level of
expectation of the stakeholders’ amongst software companies with respect to
general meeting related practices
Table 5.4.14
ANOVA for significant difference between Software Companies & the
level of Stakeholders expectation of General Meeting practices
Company Mean S.D F p-value
Infosys 19.01 0.60
0.505
0.732
Wipro 18.98 0.64
TCS 18.94 0.65
HCL 18.96 0.64
clxxiv
Satyam 18.89 0.62
Source: Primary Data
In order to find out that there is any difference between software
companies by stakeholders and expectation of general meeting of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.732) is greater than the
(0.05), hence there is no significant difference between level of expectation of
stakeholders of general meeting, and the null hypothesis is accepted.
Table 5.4.15
ANOVA for significant difference in Educational Qualification & the
level of stakeholders’ expectation of General Meeting practices
Educational Qualifications Mean S.D F p-value
School level 18.80 0.61
1.159
0.324
Graduate 19.07 0.62
Post – Graduate 18.89 0.59
Professionals 18.97 0.66
Source: Primary Data
In order to analyse that there is any difference between educational
qualifications of the stakeholders and expectation in general meeting of
selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.324) is
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and general meeting related practices of selected
software companies.
Table 5.4.16
ANOVA for significant difference in Occupation & the level of
stakeholders’ expectation of General Meeting practices
clxxv
Occupation Mean S.D F p-value
Business 19.01 0.67
0.491
0.689
Private 18.92 0.63
Public 18.98 0.61
Government 18.93 0.62
Source: Primary Data
In order to find out that there is any difference between occupation of
the stakeholders and expectation in general meeting practices of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0. 689) is greater than the
(0.05), there is no significant difference between occupation of stakeholders
and general meeting related practices of selected software companies.
Table 5.4.17
ANOVA for significant difference in Age & the level of stakeholders’
expectation of General Meeting practices
Age Mean S.D F p-value
25-35 years 18.86 0.61
1.482
0.218
36-45 years 18.92 0.61
46-55 years 18.98 0.64
Above 55 years 19.03 0.65
Source: Primary Data
In order to find out that there is any difference between age groups of
the stakeholders and expectation in general meeting practices of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0. 218) is greater than the
(0.05), there is no significant difference between age groups of stakeholders
and general meeting related practices of selected software companies.
clxxvi
clxxvii
Table 5.4.18
ANOVA for significant difference in Size of Investment & the level of
stakeholders’ expectation of General Meeting practices
Size of Investment Mean S.D F p-value
Rs.10,000 - Rs.24,999 18.89 0.62
1.198 0.303 Rs. 25,000 - Rs. 99,999 18.90 0.62
Above Rs.1,00,000 18.99 0.63
Source: Primary Data
In order to analyse that there is any difference between size of
investments of the stakeholders and expectation in general meeting practices
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0. 303) is
greater than the (0.05), there is no significant difference between size of
investments of stakeholders and general meeting related practices of selected
software companies.
Table 5.4.19
Kruskal Wallis test for significant difference in educational qualifications
& the level of expectation in General Meeting practices.
Compan
y Variables p-value
Infosys
Educational Qualifications 0.329
Occupation 0.223
Age 0.494
Size of Investment 0.325
Educational Qualifications 0.568
clxxviii
Wipro
Occupation 0.712
Age 0.352
Size of Investment 0.877
TCS
Educational Qualifications 0.488
Occupation 0.334
Age 0.487
Size of Investment 0.599
HCL
Educational Qualifications 0.519
Occupation 0.647
Age 0.065
Size of Investment 0.9
Satyam
Educational Qualifications 0.229
Occupation 0.11
Age 0.726
Size of Investment 0.844
Source: Primary Data
In order to find out that there is any difference among educational
qualifications, occupation, age and size of investments of stakeholders and
general meeting practices of selected five software companies, the Kruskal
Wallis test was used to find out the significance of difference between
variables. Since the p values given in the above table are greater than the
(0.05), there is no significant difference among, educational qualifications,
occupation, age and size of investments of stakeholders and general meeting
practices of selected software companies.
clxxix
5.5 STAKEHOLDERS’ PERCEPTION ON SATISFACTION LEVELS
IN CORPORATE GOVERNANCE PRACTICES IN SOFTWARE
COMPANIES
5.5.1 Analysis of level of satisfaction in Disclosure of information to
Stakeholders
Null hypothesis Ho-5: There is no significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect to
the disclosure of information to Stakeholders.
Table 5.5.1
ANOVA for significant difference between Software companies & the
level of Stakeholders’ Satisfaction of Disclosure of information
Company Mean S.D F p-value
Infosys 14.36 0.62
104.72 .001
Wipro 14.49 0.65
TCS 13.26 0.87
HCL 12.97 0.85
Satyam 8.22 0.98
Source: Primary Data, shaded figures indicates significance
In order to find out that there is any difference among software
companies by stakeholders and level of satisfaction of disclosure of
information of selected five software companies, the ANOVA test was used to
find out the significance of difference between two variables. Since the p
value (0.001) is lesser than the (0.05), hence there is significant difference
between level of satisfaction of disclosure of information, and the null
hypothesis is rejected.
Table 5.5.2
Post hoc test for significant difference among software companies & the
level of stakeholders’ satisfaction of disclosure of information
clxxx
(I) corporate invested (J) corporate invested p-value
Infosys
Wipro 0.632
TCS 0.000
HCL 0.000
Satyam 0.000
Wipro
Infosys 0.632
TCS 0.000
HCL 0.000
Satyam 0.000
TCS
Infosys 0.000
Wipro 0.000
HCL 0.000
Satyam 0.000
HCL
Infosys 0.000
Wipro 0.000
TCS 0.099
Satyam 0.000
Satyam
Infosys 0.000
Wipro 0.000
TCS 0.000
HCL 0.000
Source: Primary Data, shaded figures indicates significance
In order to find out that which two groups are significantly different in
the selected five software companies, the Post hoc test was used. It is
observed from the above table that the p value is less than the (0.05) there is
significant difference between all the companies in level of satisfaction with
respect to the disclosure of information to Stakeholders, but the significance is
not seen between Infosys and Wipro
Table 5.5.3
t-test for Gender with respect to level of satisfaction in Disclosure of
information to Stakeholders
Gender Mean S.D t p-
clxxxi
value
Male 12.60 2.46 1.123 0.262
Female 12.88 2.29
Source: Primary Data
In order to find out that there is any difference between gender with
respect to the level of satisfaction in disclosure of information by
stakeholders of selected five software companies, the t test was used to find
out the significance of difference between two variables. Since the p value
(0.262) is greater than the (0.05), there is no significant difference between
gender with respect to the level of satisfaction in disclosure of information to
stakeholders of selected software companies.
Table 5.5.4
ANOVA for significant difference in Educational qualification & the level
of stakeholders’ satisfaction in Disclosure of information
Educational
Qualifications Mean S.D F p-value
School level 12.49 2.59
0.558 0.643
Graduate 12.50 2.54
Post – Graduate 12.69 2.50
Professionals 12.81 2.23
Source: Primary Data
In order to analyse that there is any difference between educational
qualifications of the stakeholders and satisfaction in disclosure of information
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.643) is
clxxxii
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and level of satisfaction of disclosure of
information of selected software companies.
Table 5.5.5
ANOVA for significant difference in size of investment & the level of
stakeholders’ satisfaction in Disclosure of information
Size of Investments Mean S.D F p-value
Rs.10,000 - Rs.24,999 11.30 2.48
16.373 .001 Rs. 25,000 - Rs. 99,999 12.08 2.54
Above Rs.1,00,000 13.05 2.26
Source: Primary Data, shaded figures indicates significance
In order to analyse that there is any difference between size of
investments of the stakeholders and satisfaction in disclosure of information
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.001) is
lesser than the (0.05), there is significant difference between size of
investments of stakeholders and level of satisfaction of disclosure of
information of selected software companies.
Table 5.5.6
Post hoc test for Size of Investment with respect to for level of satisfaction
in Disclosure of information to Stakeholders
(I) Size of investments (J) Size of investments p-value
Rs.10,000 – Rs.24,999 Rs. 25,000 - Rs. 99,999 0.179
Above Rs.1,00,000 0.000
clxxxiii
Rs. 25,000 - Rs. 99,999 Rs.10,000 - Rs.24,999 0.179
Above Rs.1,00,000 0.000
Above Rs.1,00,000 Rs.10,000 - Rs.24,999 0.000
Rs. 25,000 - Rs. 99,999 0.000
Source: Primary Data, shaded figures indicates significance
In order to find out that which two groups are significantly different in
the selected five software companies, the Post hoc test was used as significant
difference is seen between sizes of investments. The p value is lesser than the
(0.05) which is observed that significance is seen between stakeholders whose
investment is between Rs.10,000 - Rs24,999 and stakeholders who investment
is above Rs.1,00,000. with respect to the level of satisfaction in disclosure of
information to stakeholders. Also significant difference is seen between
stakeholders whose investment is Rs.25,000 – Rs.99,999 and whose
investments are more than Rs.1,00,000. Satisfaction is more in the
respondents whose investment is more than Rs.1,00,000.
Table 5.5.7
Kruskal Wallis test for significant difference in Gender, Educational
Qualifications and Size of Investments the level of satisfaction of
Disclosure of information
Company Variables p-value
Infosys
Gender 0.802
Educational Qualifications 0.057
Size of Investments 0.023
Wipro Gender 0.255
Educational Qualifications 0.132
Size of Investments 0.242
clxxxiv
TCS Gender 0.432
Educational Qualifications 0.611
Size of Investments 0.941
HCL Gender 0.723
Educational Qualifications 0.668
Size of Investments 0.365
Satyam Gender 0.531
Educational Qualifications 0.116
Size of Investments 0.740
Source: Primary Data, shaded figures indicates significance
In order to find out that there is any difference among gender,
educational qualifications, and size of investments of stakeholders and level of
satisfaction of disclosure of information of selected five software companies,
the Kruskal Wallis test was used to find out the significance of difference
between variables. Since the p values given in the above table are greater than
the (0.05), there is no significant difference among, educational qualifications,
occupation, age and size of investments of stakeholders and general meeting
practices of selected software companies, except the significant difference was
observed between size of investments with respect to level of satisfaction in
disclosure of information in Infosys.
5.5.2 Analysis of level of satisfaction in Corporate communication
Null hypothesis Ho-6: There is no significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect to
the corporate communication to Stakeholders.
Table 5.5.8
ANOVA for significant difference between Software companies & the
level of Stakeholders’ satisfaction of Corporate communication
clxxxv
Company Mean S.D F p-value
Infosys 14.88 0.33
880.84
.001
Wipro 15.00 0.00
TCS 13.81 1.13
HCL 12.86 1.59
Satyam 7.65 1.20
Source: Primary Data, shaded figures indicates significance
In order to analyse that there is any difference between software
companies by stakeholders and satisfaction in corporate communication of
selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.001) is
lesser than the (0.05), hence there is significant difference between level of
satisfaction of stakeholders and corporate communication of selected software
companies and the null hypothesis is rejected.
clxxxvi
Table 5.5.9
Post hoc test for Significant difference among software companies & the
level of stakeholders’ satisfaction of Corporate communication
(I) corporate invested (J) corporate invested p-value
Infosys
Wipro 0.002
TCS 0.000
HCL 0.000
Satyam 0.000
Wipro
Infosys 0.002
TCS 0.000
HCL 0.000
Satyam 0.000
TCS
Infosys 0.000
Wipro 0.000
HCL 0.000
Satyam 0.000
HCL
Infosys 0.000
Wipro 0.000
TCS 0.000
Satyam 0.000
Satyam
Infosys 0.000
Wipro 0.000
TCS 0.000
HCL 0.000
Source: Primary Data, shaded figures indicate significance
In order to find out that which two groups are significantly different in
the selected five software companies, the Post hoc test was used. It is
observed from the above table that the p value is less than the (0.05) there is
significant difference between all the companies in level of satisfaction with
respect to the corporate communication to Stakeholders. Wipro tops in the
satisfaction and Satyam are giving low satisfaction in terms of corporate
communication to stakeholders.
clxxxvii
Table 5.5.10
ANOVA for significant difference in Educational Qualifications & the
level of Stakeholders’ satisfaction of Corporate communication
Educational
Qualifications Mean S.D F p-value
School level 12.63 3.05
0.337 0.799 Graduate 12.71 2.97
Post – Graduate 12.89 2.82
Professionals 12.97 2.83
Source: Primary Data
In order to analyse that there is any difference between educational
qualifications of the stakeholders and satisfaction in corporate communication
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.799) is
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and level of satisfaction of corporate
communication disclosure of information of selected software companies.
Table 5.5.11
ANOVA for significant difference in Occupation with respect to level of
stakeholders satisfaction of Corporate Communication
Occupation Mean S.D F p-value
Business 12.79 3.07
0.684 0.562 Private 12.68 3.01
Public 12.89 2.82
Government 13.20 2.48
Source: Primary Data
clxxxviii
In order to find out that there is any difference between occupation of
the stakeholders and satisfaction in corporate communication of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.562) is greater than the
(0.05), there is no significant difference between occupation of stakeholders
and level of satisfaction of corporate communication of selected software
companies.
Table 5.5.12
ANOVA for significant difference in Size of Investment with respect to
level of stakeholders' satisfaction of Corporate Communication
Size of Investment Mean S.D F p-value
Rs.10,000 - Rs.24,999 11.14 2.97
13.297
.001
Rs. 25,000 - Rs. 99,999 12.38 3.14
Above Rs.1,00,000 13.24 2.67
Source: Primary Data, shaded figures indicates significance
In order to analyse that there is any difference between size of
investments of the stakeholders and satisfaction in corporate communication
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.001) is
lesser than the (0.05), there is significant difference between size of
investments of stakeholders and level of satisfaction of corporate
communication of selected software companies.
Table 5.5.13
Post Hoc test for Size of Investment with respect to level of satisfaction
in Corporate Communication among Stakeholders
clxxxix
(I) Size of investments (J) Size of investments p-value
Rs.10,000 - Rs.24,999 Rs. 25,000 - Rs. 99,999 0.053
Above Rs.1,00,000 0.000
Rs. 25,000 - Rs. 99,999 Rs.10,000 - Rs.24,999 0.053
Above Rs.1,00,000 0.000
Above Rs.1,00,000 Rs.10,000 - Rs.24,999 0.000
Rs. 25,000 - Rs. 99,999 0.000
Source: Primary Data, shaded figures indicates significance
In order to analyse that which two groups are significantly different in
the selected five software companies, the Post hoc test was used as significant
difference is seen between sizes of investments. The p value is lesser than the
(0.05) which is observed that significance is seen between stakeholders whose
investment is between Rs.10,000 - Rs24,999 and stakeholders who investment
is above Rs.1,00,000 with respect to the level of satisfaction in corporate
communication to Stakeholders. Also significant difference is seen between
stakeholders whose investment is Rs.25,000 - Rs.99,999 and whose
investments are more than Rs.1,00,000. Satisfaction is more in the
respondents who invested more than Rs.1,00,000
Table 5.5.14
Kruskal Wallis test for significant difference among educational
qualifications, occupation & size of investment and level of satisfaction
in Corporate communications
Compan
y Variables p-value
Infosys
Educational Qualifications 0.926
Occupation 0.28
cxc
Size of Investments 0.826
Wipro
Educational Qualifications 0.921
Occupation 0.916
Size of Investments 0.721
TCS
Educational Qualifications 0.315
Occupation 0.243
Size of Investments 0.636
HCL
Educational Qualifications 0.597
Occupation 0.655
Size of Investments 0.484
Satyam
Educational Qualifications 0.727
Occupation 0.283
Size of Investments 0.816
Source: Primary Data
In order to find out that there is any difference among, educational
qualifications, occupation and size of investments of stakeholders and level of
satisfaction in corporate communication of selected five software companies,
the Kruskal Wallis test was used to find out the significance of difference
between variables. Since the p values given in the above table are greater than
the (0.05), there is no significant difference among, educational qualifications,
occupations and size of investments of stakeholders with respect to level of
satisfaction of corporate communication.
5.5.3 Analysis of Satisfaction level in Transparency
Null hypothesis Ho-7: There is no significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect to
the transparency in sharing the shares allotment / borrowing information with
stakeholders.
Table 5.5.15
cxci
ANOVA for significant difference among Software companies & the level
of Stakeholders’ satisfaction in Transparency
Company Mean S.D F p-value
Infosys 9.76 0.43
763.916
.001
Wipro 9.72 0.45
TCS 9.19 0.72
HCL 8.36 0.48
Satyam 5.71 0.89
Source: Primary Data, shaded figures indicates significance
In order to analyse that there is any difference between software
companies by stakeholders and satisfaction in transparency of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.001) is lesser than the
(0.05), hence there is significant difference between level of satisfaction of
stakeholders and transparency in sharing the shares allotment / borrowing
information of selected software companies and the null hypothesis is
rejected.
Table 5.5.16
Post hoc test for Significant difference among software companies & the
level of stakeholders’ satisfaction in Transparency
(I) corporate invested (J) corporate invested p-value
Infosys
Wipro 0.954
TCS 0.000
HCL 0.000
Satyam 0.000
Wipro
Infosys 0.954
TCS 0.000
HCL 0.000
cxcii
Satyam 0.000
TCS
Infosys 0.000
Wipro 0.000
HCL 0.000
Satyam 0.000
HCL
Infosys 0.000
Wipro 0.000
TCS 0.000
Satyam 0.000
Satyam
Infosys 0.000
Wipro 0.000
TCS 0.000
HCL 0.000
Source: Primary Data, shaded figures indicates significance
In order to find out that which two groups are significantly different in
the selected five software companies, the Post hoc test was used. It is
observed from the above table that the p value is less than the (0.05), there is
significant difference between all the companies in level of satisfaction with
respect to the transparency in sharing the shares allotment / borrowing
information with stakeholders, but significant difference is not seen between
Infosys and Wipro.
Table 5.5.17
ANOVA for significant difference in Educational Qualification & level of
stakeholders' satisfaction in Transparency
Educational Qualifications Mean
S.D F p-value
School level 8.41 1.73
0.318 0.812 Graduate 8.49 1.58
Post – Graduate 8.62 1.62
Professionals 8.59 1.62
Source: Primary Data
cxciii
In order to analyse that there is any difference between educational
qualifications of the stakeholders and satisfaction in disclosure of information
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.812) is
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and level of satisfaction of in transparency in
sharing the shares allotment / borrowing information with stakeholders of
selected software companies.
Table 5.5.18
Kruskal Wallis test for significant difference in Educational
Qualifications & the level of satisfaction in Transparency
Company Variables p-value
Infosys Educational Qualifications 0.486
Wipro Educational Qualifications 0.100
TCS Educational Qualifications 0.617
HCL Educational Qualifications 0.145
Satyam Educational Qualifications 0.197
Source: Primary Data
In order to analyse out that there is any difference between educational
qualifications of stakeholders and level of satisfaction of transparency of
selected five software companies, the Kruskal Wallis test was used to find out
the significance of difference between variables. Since the p values given in
the above table are greater than the (0.05), there is no significant difference
between, educational qualifications of stakeholders and level of satisfaction of
transparency of selected software companies.
5.5.4 Analysis of Satisfaction level in General meeting practices
cxciv
Null hypothesis Ho-8: There is no significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect to
General meeting practices.
Table 5.5.19
ANOVA for significant difference among Software companies & the
level of Stakeholders’ satisfaction in General meeting
Company Mean S.D F p-value
Infosys 19.76 0.43
2688.00
.001
Wipro 19.73 0.45
TCS 18.42 1.02
HCL 16.99 1.04
Satyam 9.52 0.99
Source: Primary Data, shaded figures indicates significance
In order to find out that there is any difference between software
companies by stakeholders and satisfaction in general meeting of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.001) is lesser than the
(0.05), hence there is significant difference between level of satisfaction of
stakeholders and level of satisfaction in general meeting practices of selected
software companies and the null hypothesis is rejected.
Table 5.5.20
Post hoc test for significant difference among software companies & the
level of stakeholders’ satisfaction in General meeting
(I) corporate invested (J) corporate invested p-value
Infosys
Wipro 0.981
TCS 0.000
HCL 0.000
cxcv
Satyam 0.000
Wipro
Infosys 0.981
TCS 0.000
HCL 0.000
Satyam 0.000
TCS
Infosys 0.000
Wipro 0.000
HCL 0.000
Satyam 0.000
HCL
Infosys 0.000
Wipro 0.000
TCS 0.000
Satyam 0.000
Satyam
Infosys 0.000
Wipro 0.000
TCS 0.000
HCL 0.000
Source: Primary Data, shaded figures indicates significance
In order to find out that which two groups are significantly different in
the selected five software companies, the Post hoc test was used. It is
observed from the above table that the p value is less than the (0.05) there is
significant difference between all the companies in level of satisfaction with
respect to the general meeting to stakeholders, but significance is not seen
between Infosys and Wipro.
Table 5.5.21
ANOVA for significant difference in Educational Qualifications & level
of stakeholders' satisfaction in General meeting
Educational Qualifications Mean S.D F p-value
School level 16.63 4.08
0.601 0.615 Graduate 16.62 4.10
Post – Graduate 16.92 3.87
Professionals 17.16 3.70
Source: Primary Data
cxcvi
In order to analyse that there is any difference between educational
qualifications of the stakeholders and satisfaction in general meeting practices
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.615) is
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and level of satisfaction of general meeting
practices of selected software companies.
Table 5.5.22
ANOVA for significant difference in Occupation & level of stakeholders'
satisfaction in General meeting
Occupation Mean S.D F p-value
Business 16.67 4.21
0.76 0.517 Private 16.68 4.07
Public 17.07 3.68
Government 17.33 3.45
Source: Primary Data
In order to find out that there is any difference between occupation of
the stakeholders and satisfaction in general meeting of selected five software
companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.517) is greater than the
(0.05), there is no significant difference between occupation of stakeholders
and level of satisfaction in general meeting practices of selected software
companies.
Table 5.5.23
ANOVA for significant difference in Age & level of stakeholders
satisfaction in General meeting
Age Groups Mean S.D F p-value
cxcvii
25-35 years 16.39 4.09
1.021 0.383 36-45 years 16.73 4.06
46-55 years 17.14 3.67
Above 55 years 17.15 3.82
Source: Primary Data
In order to analyse that there is any difference between age group of the
stakeholders and satisfaction in general meeting practices of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.383) is greater than the
(0.05), there is no significant difference between age group of stakeholders
and level of satisfaction of general meeting practices of selected software
companies.
Table 5.5.24
ANOVA for significant difference in Size of Investment & level of
stakeholders satisfaction in General meeting
Size of Investments Mean S.D F p-value
Rs.10,000 - Rs.24,999 14.48 4.23
16.291
.001
Rs. 25,000 - Rs. 99,999 16.11 4.21
Above Rs.1,00,000 17.49 3.55
Source: Primary Data, shaded figures indicates significance
In order to find out that there is any difference between size of
investments of the stakeholders and satisfaction in general meeting practices
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.001) is
lesser than the (0.05), there is significant difference between size of
cxcviii
investments of stakeholders and level of satisfaction of general meeting
practices of selected software companies.
Table 5.5.25
Post Hoc Test for Size of Investment with respect to level of satisfaction in
General meeting among Stakeholders
(I) Size of investments (J) Size of investments p-value
Rs.10,000 - Rs.24,999 Rs. 25,000 - Rs. 99,999 0.076
Above Rs.1,00,000 0.000
Rs. 25,000 - Rs. 99,999 Rs.10,000 - Rs.24,999 0.076
Above Rs.1,00,000 0.003
Above Rs.1,00,000 Rs.10,000 - Rs.24,999 0.000
Rs. 25,000 - Rs. 99,999 0.003
Source: Primary Data, shaded figures indicates significance
In order to analyse that which two groups are significantly different in
the selected five software companies, the Post hoc test was used as significant
difference is seen between sizes of investments. The p value is lesser than the
(0.05) which is observed that significance is seen between stakeholders whose
investment between Rs.10,000 – Rs.24,999 and stakeholders who investment
is above Rs.1,00,00 with respect to the level of satisfaction in General meeting
practices to stakeholders. Also significant difference is seen between
stakeholders whose investment is Rs.25,000 – Rs.99,999 and whose
investments are more than Rs.1,00,000. Satisfaction is more in the
respondents who invested more than Rs.1, 00,000.
Table 5.5.26
Kruskal Wallis test for significant difference in Educational
Qualifications, Occupation, Age, Size of investment & the level of
satisfaction in General Meeting practices.
cxcix
Compa
ny Variables p-value
Infosys
Educational Qualifications 0.088
Occupation 0.274
Age 0.018
Size of Investment 0.075
Wipro
Educational Qualifications 0.629
Occupation 0.848
Age 0.011
Size of Investment 0.508
TCS
Educational Qualifications 0.612
Occupation 0.714
Age 0.03
Size of Investment 0.951
HCL
Educational Qualifications 0.231
Occupation 0.864
Age 0.649
Size of Investment 0.62
Satyam
Educational Qualifications 0.417
Occupation 0.016
Age 0.856
Size of Investment 0.526
Source: Primary Data, shaded figures indicates significance
In order to find out that there is any difference among Educational
qualifications, Occupation, Age and Size of investment of stakeholders and
level of satisfaction of general meetings practices disclosure of information of
selected five software companies, the Kruskal Wallis test was used to find out
the significance of difference between variables. Since the p values given in
the above table are greater than the (0.05), there is no significant difference
cc
among, educational qualifications, occupation, age and size of investments of
stakeholders and general meeting practices of selected software companies,
except the significance was observed between age groups in Infosys, Wipro
and TCS with respect to level of satisfaction in General meetings. Also
significance was observed between occupations in Satyam with respect to
level of satisfaction in general meeting.
5.5.5 Analysis of level of satisfaction in Performance of Board
Null hypothesis Ho-9: There is no significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect to
the performance of the board.
Table 5.5.27
ANOVA for significant difference among Software companies & the level
of Stakeholders’ satisfaction in Performance of Board
Company Mean S.D F p-value
Infosys 29.40 0.49
1870.00 .001
Wipro 29.48 0.50
TCS 28.25 1.16
HCL 25.36 2.61
Satyam 14.37 1.63
Source: Primary Data, shaded figures indicates significance
In order to study that there is any difference between software
companies by stakeholders and satisfaction in performance of board of
selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.001) is
lesser than the (0.05), hence there is significant difference between level of
cci
satisfaction of stakeholders and performance of board of selected software
companies and the null hypothesis is rejected.
Table 5.5.28
Post hoc test for significant difference among software companies & the
level of stakeholders’ satisfaction in Performance of Board
(I) corporate invested (J) corporate invested p-value
Infosys
Wipro 0.807
TCS 0.000
HCL 0.000
Satyam 0.000
Wipro
Infosys 0.807
TCS 0.000
HCL 0.000
Satyam 0.000
TCS
Infosys 0.000
Wipro 0.000
HCL 0.000
Satyam 0.000
HCL
Infosys 0.000
Wipro 0.000
TCS 0.000
Satyam 0.000
Satyam
Infosys 0.000
Wipro 0.000
TCS 0.000
HCL 0.000
ccii
Source: Primary Data, shaded figures indicates significance
In order to find out that which two groups are significantly different in
the selected five software companies, the post hoc test was used. It is observed
from the above table that the p value is less than the (0.05) there is significant
difference between all the companies in level of satisfaction with respect to
the performance of the board to stakeholders, but significance is not seen
between Infosys and Wipro.
Table 5.5.29
t-test for Gender with respect to level of satisfaction in Performance of
Board among Stakeholders
Gender Mean S.D t p-value
Male 25.25 5.99 1.144 0.253
Female 25.93 5.38
Source: Primary Data
In order to find out that there is any difference between gender with
respect to the level of satisfaction in performance of board by stakeholders of
selected five software companies, the t test was used to find out the
significance of difference between two variables. Since the p value (0.253) is
greater than the (0.05), there is no significant difference between gender with
respect to the level of satisfaction in performance of board to stakeholders of
selected software companies.
Table 5.5.30
ANOVA for significant difference in Age & level of stakeholders'
satisfaction in Performance of Board
cciii
Age Groups Mean S.D F p-value
25-35 years 24.67 6.21
1.015
0.385
36-45 years 25.09 6.13
46-55 years 25.80 5.60
Above 55 years 25.74 5.64
Source: Primary Data
In order to analyse that there is any difference between age groups of
the stakeholders and satisfaction in performance of board of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.385) is greater than the
(0.05), there is no significant difference between age groups of stakeholders
and level of satisfaction of performance of board of selected software
companies.
Table 5.5.31
ANOVA for significant difference in Educational Qualifications & level
of stakeholders' satisfaction in Performance of Board
Educational Qualifications Mean S.D F p-value
School level 24.90 6.20
0.674
0.568
Graduate 24.95 6.20
Post – Graduate 25.47 5.84
Professionals 25.79 5.56
Source : Primary Data
In order to analyse that there is any difference between educational
qualifications of the stakeholders and satisfaction in performance of board of
selected five software companies, the ANOVA test was used to find out the
cciv
significance of difference between two variables. Since the p value (0.568) is
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and level of satisfaction in performance of board
of selected software companies.
Table 5.5.32
ANOVA for significant difference in Occupation & level of stakeholders'
satisfaction in Performance of Board
Occupation Mean S.D F p-value
Business 25.09 6.27
0.789 0.501 Private 25.06 6.15
Public 25.61 5.60
Government 26.10 5.20
Source: Primary Data
In order to analyse that there is any difference between occupation of
the stakeholders and satisfaction in performance of board of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.501) is greater than the
(0.05), there is no significant difference between occupation of stakeholders
and level of satisfaction of performance of board of selected software
companies.
Table 5.5.33
ANOVA for significant difference in Number of Years of Transaction &
level of stakeholders' satisfaction in Performance of Board
Number of Years of
Transaction Mean S.D F p-value
1-2 . 11 years 25.26 5.94 1.731 0.16
3 - 5 . 11 years 24.86 6.11
ccv
6 - 8 . 11 years 26.12 5.34
Above 9 years 26.35 5.46
Source: Primary Data
In order to find out that there is any difference between number of
years of transaction of the stakeholders and satisfaction in performance of
board of selected five software companies, the ANOVA test was used to find
out the significance of difference between two variables. Since the p value
(0.16) is greater than the (0.05), there is no significant difference between
number of years of transactions of stakeholders and level of satisfaction of
performance of board of selected software companies.
Table 5.5.34
ANOVA for significant difference in Size of Investment & level of
stakeholders' satisfaction in Performance of Board
Size of Investments Mean S.D F p-value
Rs.10,000 - Rs.24,999 22.09 6.46
Rs. 25,000 - Rs. 99,999 24.36 6.45 12.923 .001
Above Rs.1,00,000 26.20 5.35
Source: Primary Data, shaded figures indicates significance
In order to find out that there is any difference between size of
investments of the stakeholders and satisfaction in performance of the board
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.001) is
lesser than the (0.05), there is significant difference between size of
investments of stakeholders and level of satisfaction of performance of the
board of selected software companies.
ccvi
Table 5.5.35
Post hoc test for Size of Investment with respect to level of satisfaction in
Performance of Board among Stakeholders
(I) Size of investments (J) Size of investments p-value
Rs.10,000 - Rs.24,999
Rs. 25,000 - Rs. 99,999 0.117
Above Rs.1,00,000 0.001
Rs. 25,000 - Rs. 99,999 Rs.10,000 - Rs.24,999 0.117
Above Rs.1,00,000 0.012
Above Rs.1,00,000 Rs.10,000 - Rs.24,999 0.001
Rs. 25,000 - Rs. 99,999 0.012
Source: Primary Data, Shaded figures indicates significance
In order to find out that which two groups are significantly different in
the selected five software companies, the post hoc test was used as significant
difference is seen between sizes of investments. The p value is lesser than the
(0.05) which is observed that significance is seen between stakeholders whose
investment is Between Rs.10,000 – Rs.24,999 and stakeholders who
investment is above Rs.1,00,000 with respect to the level of satisfaction in to
performance of the board to stakeholders. Also significant difference is seen
between stakeholders whose investment is Rs.25, 000 - Rs99, 999 and whose
investments are more than Rs.1,00,000. Satisfaction is more in the
respondents who invested more than Rs.1, 00,000.
ccvii
Table 5.5.36
Kruskal Wallis test and Mann Whitney U test for significant
difference in Gender, Age, Educational qualifications,
occupation, years of transaction, size of investment & the level of
satisfaction in Performance of Board
Company Variables p-value
Infosys
Gender 0.748
Age 0.573
Educational Qualifications 0.693
Occupation 0.517
Years of Transactions 0.535
Size of Investment 0.661
Wipro
Gender 0.683
Age 0.643
Educational Qualifications 0.637
Occupation 0.653
Years of Transactions 0.952
Size of Investment 0.321
TCS
Gender 0.715
Age 0.047
Educational Qualifications 0.838
Occupation 0.362
Years of Transactions 0.327
Size of Investment 0.417
HCL
Gender 0.748
Age 0.573
Educational Qualifications 0.693
Occupation 0.517
Years of Transactions 0.535
Size of Investment 0.661
Satyam
Gender 0.748
Age 0.573
Educational Qualifications 0.693
Occupation 0.517
Years of Transactions 0.535
Size of Investment 0.661
Source: Primary Data, shaded figures indicates significance
ccviii
In order to find out that there is any difference among gender, age
groups, educational qualifications, occupation, years of transactions and size
of investments of stakeholders and level of satisfaction of performance of
board of selected five software companies, the Kruskal Wallis test was used to
find out the significance of difference between variables. Since the p values
given in the above table are greater than the (0.05), there is no significant
difference among, gender, age groups, educational qualifications, occupation,
years of transactions and size of investments and performance of board of
selected software companies, except the significant difference was observed
between age groups in TCS with reference to level of satisfaction in
performance of board.
5.5.6 Analysis of level of satisfaction in Corporate management
Null hypothesis Ho-10: There is no significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect to
the corporate management practices.
Table 5.5.37
ANOVA for significant difference among Software companies & the level
of Stakeholders’ satisfaction of Corporate Management practices
Company Mean S.D F p-value
Infosys 24.11 0.71
2622.00 .001
Wipro 24.37 0.66
TCS 23.60 0.83
HCL 21.21 1.61
Satyam 10.46 1.64
Source: Primary Data , shaded figures indicates significance
ccix
In order to find out that there is any difference between software
companies by stakeholders and satisfaction in corporate management practices
of selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.001) is
lesser than the (0.05), hence there is significant difference between level of
satisfaction of stakeholders and corporate management practices of selected
software companies and the null hypothesis is rejected.
Table 5.5.38
Post hoc test for significant difference among software companies & the
level of stakeholders’ satisfaction in Corporate Management practices
(I) corporate invested (J) corporate invested p-value
Infosys
Wipro 0.060
TCS 0.000
HCL 0.000
Satyam 0.000
Wipro
Infosys 0.060
TCS 0.000
HCL 0.000
Satyam 0.000
TCS
Infosys 0.000
Wipro 0.000
HCL 0.000
Satyam 0.000
HCL
Infosys 0.000
Wipro 0.000
TCS 0.000
Satyam 0.000
Satyam
Infosys 0.000
Wipro 0.000
TCS 0.000
HCL 0.000
Source: Primary Data, shaded figures indicates significance
ccx
In order to analyse that which two groups are significantly different in
the selected five software companies, the post hoc test was used. It is observed
from the above table that the p value is less than the (0.05) there is significant
difference between all the companies in level of satisfaction with respect to
the corporate management practices to stakeholders, but significance is not
seen between Infosys and Wipro.
Table 5.5.39
ANOVA for significant difference in Educational Qualifications & level
of stakeholders' satisfaction in Corporate Management practices
Educational
Qualifications Mean S.D F p-value
School level 19.94 6.36
0.684
0.562
Graduate 20.55 5.35
Post – Graduate 21.00 5.23
Professionals 21.01 5.21
Source: Primary Data
In order to analyse that there is any difference between educational
qualifications of the stakeholders and satisfaction in corporate management
practices of selected five software companies, the ANOVA test was used to
find out the significance of difference between two variables. Since the p
value (0.562) is greater than the (0.05), there is significant difference between
educational qualifications of stakeholders and level of satisfaction of
corporate management practices of selected software companies.
ccxi
Table 5.5.40
ANOVA for significant difference in number of years of transaction &
level of stakeholders' satisfaction in corporate management practices
Number of years of Transaction Mean S.D F p-value
1-2 . 11 years 20.68 5.35
1.698 0.166 3 - 5 . 11 years 20.28 5.69
6 - 8 . 11 years 21.46 5.04
Above 9 years 21.60 4.70
Source: Primary Data
In order to analyse that there is any difference between numbers of
years of transaction of the stakeholders and satisfaction in corporate
management practices of selected five software companies, the ANOVA test
was used to find out the significance of difference between two variables.
Since the p value (0.166) is greater than the (0.05), there is no significant
difference between numbers of years of transaction of stakeholders and level
of satisfaction of corporate management practices of selected software
companies..
Table 5.5.41
ANOVA for significant difference in Size of Investment & level of
stakeholders' Satisfaction in Corporate management practices
Size of Investments Mean S.D F p-value
Rs.10,000 - Rs.24,999 17.59 6.26
13.858
.001
Rs. 25,000 - Rs. 99,999 19.85 5.82
Above Rs.1,00,000 21.53 4.86
Source: Primary Data, shaded figures indicates significance
In order to analyse that there is any difference between size of
investment of the stakeholders and satisfaction in corporate management
ccxii
practices of selected five software companies, the ANOVA test was used to
find out the significance of difference between two variables. Since the p
value (0.001) is lesser than the (0.05), there is significant difference between
size of investment of stakeholders and level of satisfaction of corporate
management practices of selected software companies..
Table 5.5.42
Post hoc test for Size of Investments with respect to level of satisfaction in
Corporate Management practices among Stakeholders
(I) Size of investments (J) Size of investments p-value
Rs.10,000 - Rs.24,999 Rs. 25,000 - Rs. 99,999 0.097
Above Rs.1,00,000 0.001
Rs. 25,000 - Rs. 99,999 Rs.10,000 - Rs.24,999 0.097
Above Rs.1,00,000 0.010
Above Rs.1,00,000 Rs.10,000 - Rs.24,999 0.001
Rs. 25,000 - Rs. 99,999 0.010
Source: Primary Data, shaded figures indicates significance
In order to find out that which two groups are significantly different in
the selected five software companies, the Post hoc test was used as significant
difference is seen between sizes of investments. The p value is lesser than the
(0.05) which is observed that significance is seen between Rs.10,000 –
Rs.24,999 and stakeholders who investment is above Rs.1,00,00 with respect
to the level of satisfaction in to corporate management practices to
stakeholders. Also significant difference is seen between stakeholders whose
investment is Rs.25,000 – Rs.99,999 And whose investments are more than
Rs.1,00,000. The satisfaction is more in the respondents who invested more
than Rs.1,00,000.
ccxiii
Table 5.5.43
Kruskal Wallis test for significant difference in Educational
Qualifications, years of transaction, size of investment & level of
stakeholders' satisfaction in Corporate Management practices
Company Variables p-value
Infosys Educational Qualifications 0.298
Years of transaction 0.066
Size of Investment 0.116
Wipro Educational Qualifications
0.75
Years of transaction 0.256
Size of Investment 0.471
TCS Educational Qualifications 0.473
Years of transaction 0.619
Size of Investment 0.526
HCL
Educational Qualifications 0.262
Years of transaction 0.592
Size of Investment 0.853
Satyam Educational Qualifications 0.006
Years of transaction 0.648
Size of Investment 0.440
Source: Primary Data, shaded figures indicates significance
In order to analyse that there is any difference among educational
qualifications, years of transactions and size of investments of stakeholders
and level of satisfaction of corporate management practices of selected five
software companies, the Kruskal Wallis test was used to find out the
significance of difference between variables. Since the p values given in the
above table are greater than the (0.05), there is no significant difference
among, educational qualifications, years of transactions and size of
investments of stakeholders and corporate management practices of selected
software companies, except the significant difference was observed between
ccxiv
educational qualifications in Satyam with respect to level of satisfaction in
corporate management practices.
5.5.7 Analysis of level of satisfaction in Financial practices
Null hypothesis Ho-11: There is no significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect to
financial practices
Table 5.5.44
ANOVA for significant difference among Software companies & the
level of Stakeholders’ satisfaction in financial practices
Company Mean S.D F p-value
Infosys 28.53 0.64
2425.00
.001
Wipro 28.63 0.48
TCS 26.45 1.18
HCL 25.29 1.57
Satyam 16.00 1.13
Source: Primary Data, shaded figures indicates significance
In order to find out that there is any difference between software
companies by stakeholders and satisfaction in financial practices of selected
five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.001) is
lesser than the (0.05), hence there is significant difference between level of
satisfaction of stakeholders and financial practices of selected software
companies and the null hypothesis is rejected.
ccxv
Table 5.5.45
Post hoc test for significant difference among software companies & the
level of stakeholders’ satisfaction of Financial practices
(I) corporate invested (J) corporate invested p-value
Infosys
Wipro 0.724
TCS 0.000
HCL 0.000
Satyam 0.000
Wipro
Infosys 0.724
TCS 0.000
HCL 0.000
Satyam 0.000
TCS
Infosys 0.000
Wipro 0.000
HCL 0.000
Satyam 0.000
HCL
Infosys 0.000
Wipro 0.000
TCS 0.000
Satyam 0.000
Satyam
Infosys 0.000
Wipro 0.000
TCS 0.000
HCL 0.000
Source: Primary Data, shaded figures indicates significance
In order to find out that which two groups are significantly different in
the selected five software companies, the Post hoc test was used. It is
observed from the above table that the p value is less than the (0.05) there is
significant difference between all the companies in level of satisfaction with
respect to the financial practices to stakeholders, but significance is not seen
between Infosys and Wipro.
ccxvi
Table 5.5.46
ANOVA for significant difference in Educational Qualification & level of
stakeholders' satisfaction in Financial practices
Educational
Qualifications Mean S.D F p-value
School level 24.674 5.006
0.614
0.606
Graduate 24.654 5.029
Post – Graduate 24.993 4.731
Professionals 25.322 4.525
Source: Primary Data
In order to analyse that there is any difference between educational
qualifications of the stakeholders and satisfaction in financial practices of
selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.606) is
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and level of satisfaction of financial practices of
selected software companies.
Table 5.5.47
ANOVA for significant difference in Occupation & level of stakeholders'
satisfaction in Financial practices
Occupation Mean S.D F p-value
Business 24.7 5.1
0.841 0.472 Private 24.7 5.0
Public 25.2 4.5
Government 25.6 4.3
Source: Primary Data
In order to analyse that there is any difference between occupation of
the stakeholders and satisfaction in financial practices of selected five
ccxvii
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.472) is greater than the
(0.05), there is no significant difference between occupation of stakeholders
and level of satisfaction of financial practices of selected software companies.
Table 5.5.48
ANOVA for significant difference in Monthly Income & level of
stakeholders' satisfaction in Financial practices
Monthly income Mean S.D F p-value
Below Rs.14,999 24.74 5.23
3.325 0.311
Rs.15,000 - Rs. 24,999 24.94 4.97
Rs.25,000 - Rs.44,999 24.11 5.21
Rs.45,000 - Rs. 64,999 26.06 3.60
Above Rs.65,000 24.78 4.99
Source: Primary Data
In order to analyse that there is any difference between monthly income
of the stakeholders and satisfaction in financial practices of selected five
software companies, the ANOVA test was used to find out the significance of
difference between two variables. Since the p value (0.311) is greater than the
(0.05), there is no significant difference between monthly income of
stakeholders and level of satisfaction of financial practices of selected
software companies.
Table 5.5.49
ANOVA for significant difference in Size of Investment & level of
stakeholders' satisfaction in Financial practices
ccxviii
Size of Investment Mean S.D F p-value
Rs.10,000 - Rs.24,999 21.98 4.95
16.339
.001
Rs. 25,000 - Rs. 99,999 24.06 5.13
Above Rs.1,00,000 25.71 4.38
Source: Primary Data, shaded figures indicates significance
In order to analyse that there is any difference between size of
investments of the stakeholders and satisfaction in financial practices of
selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.001) is
lesser than the (0.05), there is significant difference between size of
investments of stakeholders and level of satisfaction of financial practices of
selected software companies.
Table 5.5.50
Post hoc test for Size of Investment with reference to level of satisfaction
in Financial practices among Stakeholders
(I) Size of investments (J) Size of investments p-value
Rs.10,000 - Rs.24,999 Rs. 25,000 - Rs. 99,999 0.094
Above Rs.1,00,000 0.000
Rs. 25,000 - Rs. 99,999 Rs.10,000 - Rs.24,999 0.094
Above Rs.1,00,000 0.004
Above Rs.1,00,000 Rs.10,000 - Rs.24,999 0.000
Rs. 25,000 - Rs. 99,999 0.004
Source: Primary Data, shaded figures indicates significance
In order to find out that which two groups are significantly different in
the selected five software companies, the post hoc test was used as significant
difference is seen between sizes of investments. The p value is lesser than the
(0.05) which is observed that significance is seen between Rs.10,000 –
ccxix
Rs.24,999 and stakeholders who investment is above Rs.1,00,00 with respect
to the level of satisfaction in financial practices to stakeholders. Also
significant difference is seen between stakeholders whose investment is
Rs.25,000 – Rs.99,999 and whose investments are more than Rs.1,00,000.
The satisfaction is more in the respondents who invested more than
Rs.1,00,000.
Table 5.5.51
Kruskal Wallis test for significant difference in Educational
Qualifications, Occupation, Monthly Income, Size of investment & the
level of satisfaction in Financial practices.
Compan
y Variables p-value
Infosys
Educational Qualifications 0.906
Occupation 0.251
Monthly Income 0.88
Size of Investment 0.905
Wipro
Educational Qualifications 0.419
Occupation 0.170
Monthly Income 0.580
Size of Investment 0.297
TCS
Educational Qualifications 0.916
Occupation 0.011
Monthly Income 0.706
Size of Investment 0.228
HCL
Educational Qualifications 0.914
Occupation 0.346
Monthly Income 0.966
Size of Investment 0.978
Satyam Educational Qualifications 0.422
ccxx
Occupation 0.009
Monthly Income 0.016
Size of Investment 0.572
Source: Primary Data, shaded figures indicates significance
In order to find out that there is any difference among educational
qualifications, occupation, monthly income and size of investment and level
of satisfaction of financial practices of selected five software companies, the
Kruskal Wallis test was used to find out the significance of difference between
variables. Since the p values given in the above table are greater than the
(0.05), there is no significant difference among, educational qualifications,
occupation, monthly income and size of investment of stakeholders and
financial practices of selected software companies, except significant
difference was observed between occupation and monthly income in Satyam
and with reference to satisfaction levels in financial practices. Also
significant difference is observed between occupation with respect to level of
satisfaction in financial practices in TCS.
5.5.8 Analysis of level of satisfaction in Secretarial practices
Null hypothesis Ho-12: There is no significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect to
secretarial practices.
ccxxi
Table 5.5.52
ANOVA for significant difference among Software companies & the level
of Stakeholders’ satisfaction of Secretarial practices
Company Mean S.D F p-value
Infosys 24.32 0.88
1938.00
.001
Wipro 23.99 0.88
TCS 23.62 0.75
HCL 21.97 2.07
Satyam 12.09 0.89
Source: Primary Data shaded figures indicates significance
In order to find out that there is any difference between software
companies by stakeholders and satisfaction in secretarial practices of selected
five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.001) is
lesser than the (0.05), hence there is significant difference between level of
satisfaction of stakeholders and software practices of selected software
companies and the null hypothesis is rejected.
Table 5.5.53
Post hoc test for size of investments with reference to level of
stakeholders’ satisfaction in Secretarial Practices
(I) corporate invested (J) corporate invested p-value
Infosys
Wipro 0.053
TCS 0.000
HCL 0.000
Satyam 0.000
Wipro
Infosys 0.053
TCS 0.011
HCL 0.000
Satyam 0.000
TCS Infosys 0.000
Wipro 0.011
ccxxii
(I) corporate invested (J) corporate invested p-value
HCL 0.000
Satyam 0.000
HCL
Infosys 0.000
Wipro 0.000
TCS 0.000
Satyam 0.000
Satyam
Infosys 0.000
Wipro 0.000
TCS 0.000
HCL 0.000
Source: Primary Data, shaded figures indicates significance
In order to find out that which two groups are significantly different in
the selected five software companies, the Post hoc test was used. It is
observed from the above table that the p value is less than the (0.05) there is
significant difference between all the companies in level of satisfaction with
respect to the secretarial practices to stakeholders, but significance is not
seen between Infosys and Wipro.
Table 5.5.54
ANOVA for significant difference in Educational Qualifications & level
of stakeholders' satisfaction in Secretarial practices
Educational
Qualifications Mean S.D F p-value
School level 20.86 5.19
0.628
0.597
Graduate 20.84 4.90
Post – Graduate 21.40 4.75
Professionals 21.47 4.55
Source: Primary Data
In order to analyse that there is any difference between educational
qualifications of the stakeholders and satisfaction in secretarial practices of
ccxxiii
selected five software companies, the ANOVA test was used to find out the
significance of difference between two variables. Since the p value (0.597) is
greater than the (0.05), there is no significant difference between educational
qualifications of stakeholders and level of satisfaction of secretarial practices
of selected software companies.
Table 5.5.55
Kruskal Wallis test for significant difference in Educational
Qualifications & the level of stakeholders' satisfaction in Secretarial
practices
Company Variables p-value
Infosys Educational Qualifications 0.883
Wipro Educational Qualifications 0.157
TCS Educational Qualifications 0.572
HCL Educational Qualifications 0.55
Satyam Educational Qualifications 0.301
Source: Primary Data
In order to find out that there is any difference between educational
qualifications of stakeholders and level of satisfaction of secretarial practices
of selected five software companies, the Kruskal Wallis test was used to find
out the significance of difference between variables. Since the p values given
in the above table are greater than the (0.05), there is no significant difference
between, educational qualifications of stakeholders and level of satisfaction of
secretarial practices of selected software companies.
5.6 ANALYSIS OF COMPARISON OF VARIABLES BETWEEN
EXPECTATION AND SATISFACTION AND FACTORS
ccxxiv
An Analysis is done to understand any significant difference between
expectation and satisfaction variables.
Table 5.6.1
Comparison of variables-Disclosure, corporate communications,
transparency, general meeting between Expectation & Satisfaction level
S.No Variables Mean Rank Z-value p-value
1 Disclosure Expectation 123.16
12.132 .001 Satisfaction 219.05
2 Corporate
communication
Expectation
127.58
7.969 .001 Satisfaction 244.4
3 Transparency Expectation 118
10.029 .001 Satisfaction 216.68
4 General
meeting
Expectation 129.52 9.888 .001
Satisfaction 265.13
Source: Primary Data, shaded figures indicates significance
In order to compare the perception level of expectation and perception
level of satisfaction for four factors namely disclosure of information,
corporate communication, transparency and general meeting practices,
Wilcoxson Signed rank test for paired observations is used It is observed that
there is significant difference between level of expectation and level of
satisfaction with respect to disclosure, corporate communication, transparency
and general meeting.
Table 5.6.2
Correlations for factors in Expectation
ccxxv
Factors Disclosure Corporate
communication Transparency General
meeting
Disclosure 1
Corporate
communication
r =.696**
1
p =.000
Transparency r =.439**
r =.098* 1
p =.000 p =.023
General
meeting
r =.683**
r =.736**
r =.139**
1
p =.000 p =.000 p =0.001
Source: Primary Data, shaded figures indicates significance
* indicates correlation is significant at 5% level and ** indicates correlation is
significant at 1% level.
In order to find out that is there any correlation exists among the
factors, Karl Pearson’s coefficient of correlation test was done. It is observed
that a good significant positive correlation exists between corporate
communication and disclosure (.696), good positive correlation is observed
between General meetings and Disclosure (.683), good positive correlation is
observed between general meeting and corporate communication (.736).
Moderate positive correlation observed between disclosure and transparency
(.439). Also significant correlation is observed between Transparency and
corporate communication, Transparency and general meeting, but the
correlation coefficient was not healthy.
Table 5.6.3
Correlation between Eight factors in Satisfaction level
ccxxvi
Factors Disclosure
Corporate
communi-
cation
Transparency General
meeting
Performan
ce
of Board
Corporate
manage-
ment
practices
Financial
practices
Secre-
tarial
practices
Disclosure 1
Corporate
communi-
cation
r =.931**
1
p =.000
Transparency r =.869
** r =.878
** 1
p =.000 p =.000
General
Meeting r =.940
** r =.933
** r =.905
** 1
p =.000 p =.000 p =.000
Performance
of Board r =.935
** r =.937
** r =.899
** r =.982
** 1
p =.000 p =.000 p =.000 p =.000
Corporate
management
practices
r =.930**
r =.927**
r =.889**
r =.956**
r =.959**
1
p =.000 p =.000 p =.000 p =.000 p =.000
Financial
Practices r =.955
** r =.934
** r =.915
** r =.972
** r =.976
** r =.948
** 1
p =.000 p =.000 p =.000 p =.000 p =.000 p =.000
Secretarial
Practices r =.940
** r =.933
** r =.885
** r =.963
** r =.967
** r =.968
** r =.955
** 1
p =.000 p =.000 p =.000 p =.000 p =.000 p =.000 p =.000
** indicates the correlations are significant at 1% level.
shaded figures indicate significance In order to find out that is there any correlation exists among the
factors, Karl Pearson’s coefficient of correlation test was done. From the
above table it is observed that there is significant high positive correlation
observed between all the eight factors of the level of satisfaction of
stakeholders between each other.
Table 5.6.4
Correlation between Current Indian Corporate Governance laws as
Eight factors of level of Satisfaction
ccxxvii
S.
No. Variables
Reliability
Coefficient Mean S.D
Correlation with
current Indian
Corporate
Governance laws
1 Disclosure 0.876 4.22 0.9 .886**
2
Corporate
communication 0.959 4.28 0.99 .889**
3 Transparency 0.901 4.28 0.85 .880**
4
General meeting—
satisfaction 0.958 4.23 1.03 .918**
5
Performance of
Board 0.966 4.23 1.06 .931**
6
Corporate
management
practices 0.956 4.16 1.16 .893**
7 Financial practices 0.833 3.57 0.96 .922**
8
Secretarial
practices 0.955 4.25 1.03 .912**
** indicates Correlations is significant at the 1% level
In order to find out the correlation between eight factors and current
Indian corporate governance laws, the correlation analysis was done. From
the above table there is significant high positive correlation observed between
Disclosure and current Indian Corporate Governance laws (.886). There is
significant high positive correlation observed between Corporate
communication and current Indian Corporate Governance laws (.889). There
is significant high positive correlation observed between transparency and
current Indian Corporate Governance laws (.880). There is significant high
positive correlation observed between general meeting and current Indian
Corporate Governance laws (.918). There is significant high positive
correlation observed between performance of board and current Indian
Corporate Governance laws (.931). There is significant high positive
correlation observed between corporate management practices and current
Indian Corporate Governance laws (.893). There is significant high positive
ccxxviii
correlation observed between financial practices and current Indian Corporate
Governance laws (.922). There is significant high positive correlation
observed between Secretarial practices and current Indian Corporate
Governance laws (.912). Also reliability of eight factors of level of
satisfaction is also shown in the above table which is good.
Table 5.6.5
Eigen values to identify the factors of satisfaction of corporate
governance practices
Factors Initial Eigen values
Eigen Value Percentage of Variance Cumulative Percentage
1 4.024 47.73 47.73
2 2.185 6.97 54.70
3 2.054 6.19 60.90
4 1.965 5.16 66.06
5 1.852 5.02 71.08
6 1.596 4.96 76.04
7 1.232 3.58 79.62
8 1.012 2.23 81.85
There are 36 variables to measure the stack holder’s satisfaction, which
are reduced into fewer factors by analyzing correlation between variables
(satisfaction). In this case 36 variables are reduced in to 8 factors which
explain the much of the original data. From the cumulative percentage
column, the eight factors extracted together accounts for 81.85 % of the total
variance (information contained in 36 variables).
Table 5.6.6
Table of Factors and Variables
ccxxix
F
actor
Variables Factor Scores
1
Dividend Declaration 0.839
Bonus Shares Declaration 0.830
Cash Dividend 0.802
Property and Paper Dividend 0.801
Winding Up Status 0.795
Financial Transactions 0.793
Recommendations to invest 0.792
2
Happy with Corporate Governance 0.791
Happy with Performance of Chairman 0.786
Happy with performance of BOD 0.785
Happy with Dividend 0.782
Happy with growth of company 0.781
Happy with CSR activities 0.771
3
Suing on wrongful acts 0.770
Composition of BOD 0.761
Performance of Chairman 0.755
Performance of BOD 0.751
Performance of Leadership 0.742
4
Investor Relations 0.732
Grievance Resolution 0.721
Growth Information 0.712
Minutes of AGM 0.702
Copies of Minutes 0.701
Performance of IRO / CS 0.699
5
Appointment of Directors/Auditors 0.698
Calling EGM 0.657
Demand for Poll 0.652
Inspection of books of accounts / records 0.632
ccxxx
F
actor
Variables Factor Scores
6
Corporate Communication of Allotment of
Shares
0.621
Corporate Communication of Share Certificates
Issue
0.612
Corporate Communication of Transfer of
Shares
0.602
7
Disclosure of Income and Expenditure 0.601
Disclosure of Actual Profitability 0.589
Disclosure of Actual Risk 0.574
8 Transparency of Share Allotment 0.536
Transparency of Borrowing Loan/ Loan Capital 0.526
In order to find out is there any grouping of variables possible by way
of factor analysis was explored The details of such grouping are inferred from
the above table are that:
Factor 1 is a combination of 7 original variables such as Dividend
declaration, Bonus shares declaration, Cash Dividend, Property and paper
dividend, winding up status, Financial transactions of the company and
recommendation to invest which is named as stake holder’s perception
towards financial practices of corporate governance
Factor 2 is a combination of 6 original variables such as happy with
corporate governance, happy with performance of Chairman, happy with
performance of the BOD, happy with declaration of dividend, happy with
current growth of the company and happy with current corporate social
responsibility which is named as stake holder’s perception towards
performance of the board
ccxxxi
Factor 3 is a combination of 5 variables such as Right to Suing on
wrongful acts, Composition of BOD, Performance of Chairman, Performance
of BOD and Performance of Leadership which is named as stake holder’s
perception towards corporate management practices.
Factor 4 is a combination of 6 variables such as Investor Relations,
Grievance Resolution, Growth Information, Minutes of AGM, Copies of
Minutes and Performance of IRO / CS and which is named as stake holder’s
perception towards Secretarial practices.
Factor 5 is a combination of 4 variables such as Appointment of
Directors/Auditors, Calling EGM, Demand for Poll and Inspection of books of
accounts / records which is named as stake holder’s perception towards
General meeting related practices.
Factor 6 is a combination of 3 variables such as Corporate
Communication of Allotment of Shares, Corporate Communication of Share
Certificates Issue and Corporate Communication of Transfer of Shares which
is named as stake holder’s perception towards corporate communication
practices.
Factor 7 is a combination of 3 variables such as Disclosure of income
and expenditure are transparent, Disclosure of actual profitability of the
company and Disclosure of actual risk in business which is named as stake
holder’s perception towards disclosure practices.
Factor 8 is a combination of 2 variables such as which is named as
Transparency of Share Allotment and Transparency of Borrowing Loan/ Loan
Capital stake holder’s perception towards transparency practices.
5.7 MODELING
ccxxxii
Figure 1 : Model for increasing the stakeholders’ perception of
satisfaction in Corporate Governance practices.
A model is developed to see whether all the eight factors of satisfaction
lead to satisfaction in corporate governance. In this model all the eight factors
are observed factors through the variables measured in the questionnaire.
Satisfaction in corporate governance is unobserved variable. The above model
meets the requirement of correlating all the eight factors so as to increase the
satisfaction level. The model fit the Chi-square having 123(p = .000), which
has goodness of fit index GFI as .946. The Root Mean Square Error of
Approximation (RMSEA) is 0.04, which shows this as a better model.
5.8 CONCLUSION
ccxxxiii
From the above analysis, it is observed that the stakeholders’’
perception levels of expectations of CG practices are almost the same in all
the companies, but there is a clear difference in their levels of satisfaction in
the companies in which they invested. There is a conspicuous difference in
satisfaction levels in the case of stakeholders’ of Infosys and Wipro and other
companies. A model is proposed to achieve a higher level of satisfaction with
the variables identified so as to gain higher satisfaction of stakeholders in the
software companies.
ccxxxiv
CHAPTER – VI
SUMMARY OF FINDINGS, SUGGESTIONS AND
CONCLUSION
6.1 INTRODUCTION
The study on stakeholders’ perception of corporate governance
practices with reference to select software companies was taken with the
prime objective of analysing stakeholders’ perception towards their level of
expectations and satisfactions on CG practices in select software companies in
India. A questionnaire survey was conducted, data collected therein were
analyzed with statistical tools and the findings were arrived. A summary of
findings, suggestions, scope for further future research and conclusion were
discussed below:
6.2 FINDINGS
The study reveals out the major findings that were distilled from the
analysis using various tools as enumerated earlier, are summarized below:
1. The study of the demographic variables shows the inference that, male
stakeholders were high in Infosys and low in TCS and female were high in
TCS and low in Infosys. The age groups distribution was high in the case
of 25-35 and 36-45 years with Satyam, 46-55 with Infosys and above
55years with HCL. The spread of educational qualifications among the
respondents were school level and graduates were high at Satyam, post-
graduates with TCS and professionals with Infosys. The occupation of the
respondents of various companies taken for study was, business and
private were high in Satyam, public in TCS and government respondents
high in HCL. The monthly income of the respondents was distributed in
ccxxxv
the study was high in Satyam for the categories of less that Rs 15,000 and
Rs 25,000-44,999, TCS was having high in Rs 15,000-24,999, HCL with
Rs. 45,000-64,999 and above Rs 65,000 with Infosys. The number of
years of transaction was high in the category of 1-2.11 years with TCS, 3
to 5.11 years with Satyam, and Infosys had high for 6-8.11 and above 9
years. As far as size of investments are concerned, Satyam had high in
both Rs 10,000-24,999 and Rs 25,000-99,999 categories and Infosys had
high in Rs 1,00,000 and above category. Further the study indicates that
the Infosys stakeholders were more aware of the practices and Satyam
stakeholders were least aware of the corporate governance.
2. The analysis of expectation variables indicates that the respondents’
expectation was uniformly high in all variables with various companies, as
they seek them as a matter of stakeholders in those companies. The
expectation variables namely, disclosure of income and expenditure,
disclosure of actual profitability and actual risk, were uniformly high in all
companies. It is the same with the case of variables like financial
transactions, access to minutes of annual general meeting and copies
thereof, calling an extra-ordinary general meeting; Moderate levels were
found in the case of property and paper dividend, growth information,
transparency of shares allotment. Low expectations were reported on the
expectation variable, winding up. The other expectation variables spread
across from high to low, namely dividend declaration, investor relations,
corporate communication on shares allotment, issue and transfer,
transparency of loan capital, appointment of directors / auditors.
3. The findings on the satisfaction variables analysis are that in most of the
variables the respondents highly satisfied with Infosys and Wipro, where
as it was moderate for TCS and HCL and low in Satyam. Respondents
reported that Infosys was high in satisfaction of variables namely
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disclosure of income and expenditure, investor relations, bonus dividend,
cash dividend, property and paper dividend, corporate communication on
share allotment, its issue and transfer, loan capital, inspection of books of
accounts/records, suing the officers of the company, performance of
chairman, corporate social responsibility and satisfaction of current
corporate governance laws. Wipro was high compared to other companies
for the satisfaction variables namely, disclosure of actual profitability and
actual risk, dividend declaration process, financial transactions,
transparency of share allotment, demand for poll, composition of board,
retaining the shares due to happy with performance of chairman,
performance of board and leadership, happy with dividend declaration and
growth. TCS was high compared to other companies, in the satisfaction
variables namely, access to minutes of the annual general meeting and its
copies thereof, corporate governance practices. In the case of satisfaction
of performance of investor relations officer / company secretary and
retention of shares it was high in three companies, namely Infosys, Wipro
and TCS. The satisfaction of recommendations to change the reporting
was low in all companies.
4. There is no significant difference in the level of expectation of the
stakeholders’ amongst software companies with respect to the disclosure
of information to Stakeholders. Since p>0.05, the null hypothesis is
accepted at 5% level of significance. Hence there is no significant
difference in the level of expectation of the stakeholders’ amongst
software companies with respect to the disclosure of information to
Stakeholders. There is significant difference between male and females,
females’ expectations are more compared to males. There is no significant
difference between educational qualifications with respect to expectations
regarding disclosure of information to stakeholders. There is no
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significant difference between size of investment with respect to
expectations regarding disclosure of information to stakeholders.
Significant difference is observed between genders of TCS and Satyam.
Also significant difference is observed between educational qualifications
with reference to disclosure.
5. There is no significant difference in the level of expectation of the
stakeholders’ amongst software companies with respect to corporate
communication to Stakeholders. Since p>0.05, the null hypothesis is
accepted at 5% level of significance. Hence there is no significant
difference in the level of expectation of the stakeholders’ amongst
software companies with respect to corporate communication to
Stakeholders. There is no significant difference between educational
qualifications with respect to expectations regarding corporate
communication to stakeholders. There is no significant difference between
occupations with reference to expectations regarding corporate
communication to stakeholders. There is no significant difference between
size of investments with respect to expectations regarding corporate
communication to stakeholders. No significant difference is observed
among educational qualifications, occupation and size of investments in
any company with reference to corporate communication.
6. There is no significant difference in the level of expectation of the
stakeholders’ amongst software companies with respect to the
transparency in sharing the shares allotment / borrowing information with
stakeholders. Since p>0.05, the null hypothesis is accepted at 5% level of
significance. Hence there was no significant difference in the level of
expectation of the stakeholders’ amongst software companies with respect
to the transparency in sharing the shares allotment / borrowing information
with stakeholders. There is no significant difference between qualification
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with respect to expectations in transparency in sharing the share allotment/
borrowing information to stakeholders. No significant difference is
observed between educational qualifications with reference to transparency
in any of the companies.
7. There is no significant difference in the level of expectation of the
stakeholders’ amongst software companies with respect to general meeting
related practices. Since p>0.05, the null hypothesis is accepted at 5%
level of significance. Hence there was no significant difference in the
level of expectation of the stakeholders’ amongst software companies with
respect to general meeting related practices. There is no significant
difference observed between educational qualifications with respect to the
expectations of the stakeholders in general meeting related practices.
There is no significant difference between occupations with respect to the
expectation of the stakeholders’ in general meeting related practices. There
is no significant difference between age groups with respect to the
expectation of the stakeholders’ in general meeting related practices.
There is no significant difference between size of investment with respect
to the expectation of the stakeholders’ in general meeting related practices.
There is no significant difference is observed between educational
qualifications, occupation, age and size of investment with respect to level
of expectation in general meeting in any of the companies.
8. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to the disclosure
of information to Stakeholders. Since p<0.05, the null hypothesis is
rejected at 5% level of significance. Hence there is significant difference
in the level of satisfaction of the stakeholders’ amongst software
companies with respect to the disclosure of information to Stakeholders.
There is a significant difference was observed among all the companies in
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the level of satisfaction with respect to disclosure of information to
stakeholders, but the significance is not seen between Infosys and Wipro.
There is no significant difference between genders with respect to the level
of satisfaction in disclosure of information to stakeholders. There is no
significant difference seen between education levels with respect to the
level of satisfaction in disclosure of information to stakeholders. There is
significant difference seen between size of investments with respect to the
level of satisfaction in disclosure of information to stakeholders. The
satisfaction is more in the respondents whose investments is more that Rs
1,00,000. Significant difference was observed between size of investments
with respect to level of satisfaction in disclosure of information in Infosys.
9. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to the corporate
communication to Stakeholders. Since p<0.05, the null hypothesis is
rejected at 5% level of significance. Hence, there is significant difference
in the level of satisfaction of the stakeholders’ amongst software
companies with respect to the corporate communication to Stakeholders.
There is significant difference between all the companies in level of
satisfaction with respect to the corporate communication to Stakeholders.
Wipro tops in the satisfaction and Satyam are giving low satisfaction in
terms of corporate communication to Stake holders. There is no
significant difference seen between education levels, occupation, with
respect to the level of satisfaction in corporate communication to
Stakeholders. There is significant difference seen between size of
investment with respect to the level of satisfaction in corporate
communication to stakeholders. Satisfaction is more in the respondents
who invested more than Rs.1,00,000. No significant difference was
observed between educational qualifications, occupations and size of
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investments with respect to level of satisfaction in corporate
communication.
10. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to the
transparency in sharing the shares allotment / borrowing information with
stakeholders. Since p<0.05, the null hypothesis is rejected at 5%level of
significance. Hence there is significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect
to the transparency in sharing the shares allotment / borrowing information
with stakeholders. Even though significant difference is seen in general,
but between Infosys and Wipro, the difference was insignificant.
11. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to general meeting
practices. Since p<0.05, the null hypothesis is rejected at 5%level of
significance. Hence there is significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect
to General meeting practices. There is significant difference seen between
all the companies in level of satisfaction in General meeting practices, but
significance is not seen between Infosys and Wipro. No significant
difference is seen between education levels, occupation, age groups with
respect to level of satisfaction in General meeting practices to
stakeholders. There is significant difference seen between size of
investment with respect to the level of satisfaction in General meeting to
stakeholders. Satisfaction is more in the respondents who invested more
than Rs.1, 00,000. Significance was observed between age groups in
Infosys, Wipro and TCS with respect to level of satisfaction in General
meetings. Also significance was observed between occupations in Satyam
with respect to level of satisfaction in general meeting.
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12. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to the performance
of the board. Since p<0.05, the null hypothesis is rejected at 5%level of
significance. Hence there is significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect
to the performance of the board, however significance is not seen between
Infosys and Wipro. There is no significant difference seen between
genders, age, educational qualifications, occupation, and number of years
of transactions with respect to level of satisfaction in performance of the
board to stakeholders. But significant difference observed between sizes of
investment with respect to level of satisfaction in performance of the board
to stakeholders. Satisfaction is more in the respondents who invested more
than Rs.1, 00,000. Significant difference was observed between age
groups in TCS with reference to level of satisfaction in performance of
board.
13. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to the corporate
management practices Since p<0.05, the null hypothesis is rejected at
5%level of significance. Hence there is significant difference in the level
of satisfaction of the stakeholders’ amongst software companies with
respect to the corporate management practices, but significant difference is
not seen between Infosys and Wipro. Significant difference is seen
between educational qualifications with respect to level satisfaction in
corporate management practices. No significant difference is seen
between numbers of years of transaction with respect to level of
satisfaction in corporate management practices. There is significant
difference observed between size of investment with respect to level of
satisfaction in performance of the board to stakeholders. Satisfaction is
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more in the respondents who invested more than Rs.1,00,000.
Significance was observed between educational qualifications in Satyam
with respect to level of satisfaction in corporate management practices.
14. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to financial
practices Since p<0.05, the null hypothesis is rejected at 5%level of
significance. Hence there is significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect
to financial practices, but the significance is not seen between Infosys and
Wipro. There is no significant difference seen between educational
qualifications, occupation, and monthly income with respect to level of
satisfaction in financial practices. There is significant difference observed
between sizes of investment with respect to level of satisfaction in
financial practices to stakeholders. Satisfaction is more in the respondents
who invested more than Rs.1,00,000. Significant difference was observed
between occupation and monthly income in Satyam and occupation in
TCS with reference to satisfaction levels in financial practices.
15. There is no significant difference in the level of satisfaction of the
stakeholders’ amongst software companies with respect to secretarial
practices. Since p<0.05, the null hypothesis is rejected at 5%level of
significance. Hence there is significant difference in the level of
satisfaction of the stakeholders’ amongst software companies with respect
to secretarial practices. There is significant difference between all the
companies in level of satisfaction with respect to Secretarial Practices, but
significant difference is not seen between Infosys and Wipro. There is no
significant difference seen between educational qualifications with respect
to secretarial practices.
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16. Wilcoxon signed rank test is used to compare four factors in expectation
and satisfaction. Significant difference is observed between level of
expectation and level of satisfaction with respect to Disclosure, Corporate
communication, Transparency and General meeting. The respondents
have differences in expectation level and satisfaction level.
17. Correlation for factors in Expectation - There is good significant positive
correlation observed between corporate communication and disclosure,
General meetings and Disclosure, general meeting and corporate
communication. Moderate positive correlation observed between
disclosure and transparency. Also significant correlation is observed
between Transparency and corporate communication, Transparency and
general meeting, but the correlation coefficient was not healthy.
18. Correlation between eight factors in Satisfaction level - There is significant
high positive correlation observed between all the eight factors of the level
of satisfaction of stakeholders between each other.
19. Correlation between Current Indian Corporate Governance laws as eight
factors of level of Satisfaction - There is significant high positive
correlation observed between the factors namely disclosure, corporate
communication, transparency, general meeting, performance of Board,
corporate management practices, financial practices, Secretarial practices
and current Indian Corporate Governance laws. Also reliability of eight
factors of level of satisfaction are good.
20. A model has been built with eight factors as how it contributes to the
increased satisfaction level for the stakeholders’ perception on corporate
governance.
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6.3 SUGGESTIONS
After analyzing the data using various statistical tools, the suggestions
based on the findings of the study are as follows:
1. The study reveals that the awareness about the corporate governance
practices of Wipro, TCS HCL was moderate and Satyam was low. They
can educate the stakeholders by way of literature and through investor
meetings, the various aspects of corporate governance practices prevailing
in their companies.
2. The satisfaction of the stakeholders towards various variables taken for
study demonstrates that Infosys needs to concentrate more on disclosure of
actual profitability and actual risk, dividend declaration process, financial
transactions, transparency of share allotment, demand for poll,
composition of board, retaining the shares due to happy with performance
of chairman, performance of board and leadership, happy with dividend
declaration and growth.
3. The satisfaction variables namely disclosure of income and expenditure,
investor relations, bonus dividend, cash dividend, property and paper
dividend, corporate communication on share allotment, its issue and
transfer, loan capital, inspection of books of accounts/records, suing the
officers of the company, performance of chairman, corporate social
responsibility and satisfaction of current corporate governance laws are
required to be given extra emphasis by Wipro.
4. In general both TCS and HCL were of the moderate level in various
satisfaction variables. They need to take appropriate steps to improve the
satisfaction of the stakeholders in those variables.
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5. The satisfaction of most of the variables in Satyam were low and it
requires the serious attention of the management. They have to revamp the
whole corporate governance set up in the company and disseminate
appropriate information to give a better idea about the various practices
followed in Satyam.
6. As to get the overall satisfaction in corporate governance, a model has
been arrived, which indicates that the companies need to pay more
attention to improve the satisfaction variables discussed herein, will in
turn increase the overall satisfaction of the stakeholders.
6.4 SCOPE FOR FURTHER RESEARCH
The present study analysed the perception levels of stakeholders in
select listed software companies in India. Further research can be done in
other sectors such as manufacturing, pharma, oil and gas, chemicals and so on,
as the stakeholders perceptions may vary. It is pertinent that the companies
need to know before they go for any Initial Public Offer (IPO) as where they
stand in good CG practices to attract more capital from India and abroad.
Studies can be taken up at institutional levels to have a wide spread reach of
different companies across India so as to broaden the practices at Industry
level as well as national level, since individual means may not permit to take
up a huge study, which involves cost and resources. Further, Government
may conduct periodic research on CG practices in terms of stakeholders’
perception so as to amend the laws and regulations to best suit the present day
requirements and to align with the codes of other nations and international
bodies / organizations.
6.5 CONCLUSION
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On the basis of this study, “A study on the stakeholders’ perception of
corporate governance practices with reference to the software companies in
India”, it is observed that:
The Corporate Governance is the key for a good corporate growth and
its success. The efficiency, transparency and fulfilling the laws of the land are
measured through the way company follows and maintains its corporate
governance practices. It is the requirement of most of the countries that those
corporates who trade on public money needs to follow some of the basic
corporate governance practices that are prescribed by way of code, law or
guidelines given by the country’s apex stock exchange body or government
agency which monitors those corporations. After witnessing some of the big
business corporations ending up with bankruptcy due to mismanagement and
fraudulent activities by the people who are at the helm of affairs, the
governments of those corporations came out with stringent laws to curb such
things in the future. Some of the important such promulgations were SOX
compliance, reforms based on Cadbury Committee report, the Hample
Committee report, Blue Rippon Committee report, the King committee report,
the Organization for Economic Cooperation and Development (OECD) code
etc.,
In India, similar enactments were made to safeguard the interests of
investing public. It can be traced back to the announcement of good corporate
governance code issued by Confederation of Indian Industries and various
reports given by the high powered committees appointed by Government of
India and Securities and Exchange Board of India, namely Kumar Mangalam
Birla Committee report, the Godbole Committee report, Naresh Chandra
Committee report and Narayana Murthy Committee report. Unless the
corporate governance practices as pronounced by various committees through
their report, which were mandated by government are followed in letter and
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spirit by companies in general and software companies in particular in India, it
will not achieve the desired result of globalization and attraction of capital
from abroad. The software companies are the leading foreign revenue earners
to the country in addition to creating lot of job opportunities to local Indians.
Hence it is very important to check and confirm that the corporate governance
practices as perceived by stakeholders are satisfactory and upto the
expectation and requirements of law. Therefore the aim is to study on the
stakeholders’ perception of corporate governance practices with reference to
the software companies in India. Based on the objectives of this research, the
study has analyzed the variables of stakeholders’ expectation and satisfaction.
The leading software companies were taken for study. The primary data was
collected from sample respondents by way of a structured questionnaire and
data was analysed using some of the statistical tools namely t test, ANOVA,
Kruskal Wallis test, Mann Whitney U test, Factor Analysis, Bivariate
Correlations and a model was proposed as how to achieve better satisfaction
of corporate governance in software companies.
The first part of the study analyse the demographic variables of the
respondents, the second part on stakeholders’ perception on expectation from
software companies and the third part on their perception on satisfaction of the
chosen variables. The findings indicate certain strengths and the weaknesses
of the chosen software companies for the study, namely Infosys, Wipro, TCS,
HCL and Satyam. Most of the stakeholders’ perception on satisfaction were
met by Infosys and Wipro as high, wherein TCS and HCL it was moderate
and it was low for Satyam. Based on the outcome of the study, the Infosys
and Wipro needs to concentrate in fewer areas of corporate governance
practices, TCS and HCL requires a broad approach to meet the perception
requirements of the stakeholders and Satyam has to do a revamp of its whole
corporate governance practices as it was faring low in almost all satisfaction
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variables. The proposed model may be followed by the software companies
to achieve the desired result of higher satisfaction of stakeholders.
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APPENDIX – I
Dear Sir / Madam,
I wish to introduce myself that I am a Research Scholar in Business Administration
at Dr. MGR University, on the title of thesis, “A study on the stakeholders’
perception of corporate governance practices with reference to the software
companies in India”. I seek your valuable time in filling up the below questionnaire
in helping me to complete my study. The information filled in this questionnaire are
treated as personal and confidential.
Thanks in advance for your kind support for my study.
Regards,
N Natarajan
Personal Information:
1. Gender Male Female
2. Age: 25 – 35 , 36 –45 , 46 – 55 , 56 and above .
3. Qualifications: School Level , Graduate , Post-Graduate ,
Professional .
4. Occupation: Business , Employed . If employed, Private /Public ,
Government .
5. Income (per month): INR – 14,999 & below , 15,000 to 24,999 , 25,000
to 44,999 ,
45,000 to 64,999 , 65,000 & above .
Shareholding information:
6 Which corporate you have invested:
Infosys , Wipro , TCS , HCL , Satyam
7. How many years you are transacting in shares of software companies?
1 – 2.11 3 – 5.11 6 – 8.11 9 and above
8. Size of investments in software companies – INR-9,999 & Below ,
10,000 – 24,999 25,000 – 99,999 , 1,00,000 and above
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9. Do you aware of Indian corporate governance practices before investing your
hard-earned money in software companies: Yes No
Note for filling up:
Please give your level of expectation on corporate governance practices.
(5 – indicates very high indicates highest favorable expectation and 1 – indicates very low
indicates the lowest)
VH – Very High (5), H – High (4), NNH – Neither Nor High (3), L – Low (2)and VL –
Very Low (1)
Level of Expectation on corporate governance practices
Infosys Wipro TCS HCL Satyam
a Disclosure of income and expenditure are
transparent
b Disclosure of actual profitability of the
company
c Disclosure of actual risk in business
d Dividend declaration process
e Investor Relations
f Grievance resolution process
g Bonus shares declaration
h Cash Dividend
i Property and paper dividend
j Growth information about the company
k How you feel the winding up status of the
company?
l How you feel the financial transactions of
the company?
m How you feel about the corporate
communication for the following:
Allotment of shares
Share certificates issue:
Transfer of Shares:
n Level of transparency for the following
Share Allotment
Borrowing loan / loan capital
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o Access to the minutes of AGM
p Possibilities of getting copies of minutes if
requested
q Participation in appointment of
directors/auditors
r Possibilities of calling for EGM
s Procedure for demand of poll for any
resolution
t Opportunity to inspect corporate books of
accounts and records
u Right to sue on wrongful acts
Note for filling up:
Please give your level of expectation on corporate governance practices.
(5 – indicates very high indicates highest favorable expectation and 1 – indicates very
low indicates the lowest)
VH – Very High (5), H – High (4), NNH – Neither Nor High (3), L – Low (2)and VL –
Very Low (1)
Level of satisfaction of corporate governance practices
Infosys Wipro TCS HCL Satyam
a
Disclosure of income and expenditure are
transparent
b
Disclosure of actual profitability of the
company
c Disclosure of actual risk in business
d Dividend declaration process
e Investor Relations
f Grievance resolution process
g Bonus shares declaration
h Cash Dividend
i Property and paper dividend
j Growth information about the company
k
How you feel the winding up status of the
company?
l
How you feel the financial transactions of
the company?
m
How you feel about the corporate
communication for the following:
i Allotment of shares
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ii Share certificates issue:
iii Transfer of Shares:
n Level of transparency for the following
i Share Allotment
ii Borrowing loan / loan capital
o Access to the minutes of AGM
p
Possibilities of getting copies of minutes if
requested
q
Participation in appointment of
directors/auditors
r Possibilities of calling for EGM
s
Procedure for demand of poll for any
resolution
t
Opportunity to inspect corporate books of
accounts and records
u Right to sue on wrongful acts
v
Did you satisfy with the current
composition of BOD?
w
How do you feel about the performance of
the chairman of the company?
x
How do you feel about the performance of
the BOD of the company?
y
How do you feel about the performance of
the Leadership of the company?
z
How do you feel about the performance of
the Investor Relations Officer / Company
Secretary of the company?
aa
Do you continue to hold shares in your
company, because of the following?
i
I am happy with their corporate
governance
ii
I am happy with the performance of
Chairman
iii
I am happy with the performance of the
BOD
iv
I am happy with the declaration of
dividend
v
I am happy with the current growth of the
company
vi
I am happy with the current corporate
social responsibility (CSR) activities of the
company
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ab Do you like to recommend to your friends
to invest into your company (Certainly /
Probably / Not interested – pl indicate in your
companies (use C, P N for the same)
22. Are you satisfied with the current Indian corporate governance laws?
(a) Highly satisfied (b) Satisfied (c) Neither Nor satisfied (d)
Dissatisfied (e) Highly dissatisfied
23. Would you like to recommend any changes on the reporting of information for
shareholders..??
(a) Yes (b) No
If yes, please list out your suggestions in the order of ranking (B/S items, P/L items
etc.)
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