Coporate Governance Lec 8

download Coporate Governance Lec 8

of 37

Transcript of Coporate Governance Lec 8

  • 8/4/2019 Coporate Governance Lec 8

    1/37

    Corporate Governance

    Lecture 9 & 10

  • 8/4/2019 Coporate Governance Lec 8

    2/37

    Important Websites

    Securities & Exchange Board of India,

    www.sebi.org

    Academy of Corporate Governance

    www.academyofcg.org

    CII

    www.ciionline.org

    Organization for Economic Cooperation and Development(OECD)

    www.oecd.org

    European Corporate Governance Institute

    www.ecgi.org

    http://www.sebi.org/http://www.academyofcg.org/http://www.ciionline.org/http://www.oecd.org/http://www.ecgi.org/http://www.ecgi.org/http://www.oecd.org/http://www.ciionline.org/http://www.academyofcg.org/http://www.sebi.org/
  • 8/4/2019 Coporate Governance Lec 8

    3/37

    What is Corporate

    Governance?

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    4/37

    Genesis & Importance of CG

    Concept originated with separation of ownership &

    management

    Origin can be traced back to Agency Theory-- A theory

    concerning the relationship between a principal

    (shareholder) and an agent of the principal (company's

    managers)

    Corporatisation of business and increasing scales of

    production

    Opening of Economy

    Compliance Requirements

    Capital Markets are getting Institutionalized

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    5/37

    Customers

    Shareholders

    Board of Directors

    Management

    Employees

    Society

    Suppliers

    Government

    Environment

    Corporate Governance Tripod

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    6/37

    Corporate Governance (CG)

    Designing and implementing systems, procedures &institutions that ensure that management acts in the bestinterest of the owners or shareholders.

    The fundamental objective of good CG is to strike a

    balance at all times between shareholders & otherstakeholders.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    7/37

    Stakeholder Perception of

    Governance?

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    8/37

    Shareholders

    Return on invested capital.

    Debt Holders

    High debt protection measures credit rating

    CustomersMarket Share; Assessment of Customer satisfaction; Cost

    savings passed on to customers etc.

    Value creation Thru Governance:

    Stakeholder perception

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    9/37

    Value creation Thru Governance:

    Stakeholder perception Employees

    Absolute Salary levels, adjusted growth in average annualsalaries; Intangibles etc.

    Suppliers

    Relative change in credit terms; Support/Intangibles tosuppliers, etc.

    Society

    Total direct taxes paid; Employment generated;Expenditure on social infrastructure; Environmental/Social

    impact cost; Fair practices followed etc.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    10/37

    Historical Developments

    http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    11/37

    International Developments

    Organization for Economic Cooperation and

    Development (OECD) has set a cogent

    principles of corporate governance

    A) The Right of shareholdersB The equitable treatment of shareholders

    C) Role of Stakeholders

    D) Disclosure and Transparency

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    12/37

    Developments in UK

    Cadbury Committee Report- 1992 focused on

    accountability & transparency aspects

    Greenbury Committee Report-1995 highlighted the

    executive and Directors role & compensationaspects

    Myner Committee Report-1995 focussed on

    productive relationship between owners and

    managers

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    13/37

    Development in USA

    CG came into forefront through shareholderactivism

    California Public Employees Retirement

    Systems ( CalPERS) is in the forefront ofshareholder activism and internationally creditedas a torch bearer of CG

    Global Governance Principles- Accountability,

    Transparency, Equity, Voting Methodimprovements, Long term vision

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    14/37

    CG. International Developments

    Surbanes Oxley Act, 2002 Post ENRON development

    Most comprehensive piece of legislation in last

    70 years Quality Review Board ( Auditors

    Independence)

    Independent Directors

    Whistle Blower Policy

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    15/37

  • 8/4/2019 Coporate Governance Lec 8

    16/37

    SEBI-

    Malpractices took on significant proportions and

    the grievances of retail investors increased

    alarmingly.

    GOI was rather helpless in solving the retailinvestors' grievances in such large volumes

    because of the lack of proper penal provisions.

    SEBI was constituted as a supervisory body toregulate and promote security markets.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    17/37

    Developments in India

    1997 : Release of CIIs Voluntary Code ofCorporate Governance for listed companies 2000 : Kumar Mangalam Birla committee by SEBI

    Specific clause (Clause 49) in the ListingAgreement as prescribed by SEBI.

    2002 : Naresh Chandra Committee 2003: Narayana Murthy Committee

    Both dealt with issues of transparency & accountabilitydimensions of the board process. The Naresh Chandra

    Committee also dealt with the role of the Audit function& the Audit Committee of the board.

    2005: The Naresh Chandra Committee proposedsalient changes in the Partnership Act.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    18/37

    Narayana Murthy Committee

    Recommendations

    Enhanced role of the Audit Committee

    Written code of conduct for Executive

    Management

    Non-Executive Directors

    Whistle Blower Policy

    Subsidiary companies Liability of CEO / CFO

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    19/37

    Clause 49

    At least 33% (in case of a non-executive chairman) and at least50% (in case of executive chairman) of the directors of the

    board of a company to be independent.

    Board Meetings to be held at least four times a year, with amaximum gap of four months between any two meetings.

    No director to be a member of more than 10 boards /committees or chairman of more than 5 committees and informthe respective companies about these memberships.

    Attendance of the directors at board meetings to be disclosed toshareholders.

    All material, financial and commercial transactions where thereis personal interest of directors or potential conflict of interest-related party transactions to be fully disclosed.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    20/37

    What are the various types of

    Directors on Board

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    21/37

    Type of Directors

    Executive directors have day-to-day managementresponsibilities

    Non Executive Directors- take no part in the day-to-day

    running of the business, but have the sameresponsibilities as executive directors. They use theirexperience and expertise to provide independentadvice and objectivity, and they usually have a role inmonitoring executive management.

    Nominee directors- The interests of substantialshareholders or the companys bankers may berepresented by a nominee director.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    22/37

    As per Clause 49 of Listing Agreement

    Should not be related to promoters or management at the Boardlevel or at one level below the Board

    Should not have been a partner or an executive of the statutory

    audit firm or an internal audit firm or legal and consultancy firm,during last 3 years

    Should not have been a supplier, service provider or customer ofthe company

    Should not hold 2% or more shares of the company

    Should not have been an executive of the Company in theimmediatelyproceeding 3 financial years

    Shou

    Appointment of Non Executive Director beyond continuousperiod of 9 years not permissible

    Independent Director - Definition

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    23/37

    Independent Directors Clause 49

    ( 2005)

    If the chairman of the board is a non-

    executive director, at least one-third of the

    company's board should comprise

    independent directors. If the chairman isan executive director, at least one-half (or

    50 per cent) should be independent

    directors.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    24/37

    Role of Independent Director

    Shareholders Shareholders especially minority shareholderslook at independent directors providing

    transparency in respect of the disclosures in

    the working of the company and balance inresolving conflict areas.

    Other Stakeholders

    Evaluating the boards or managementdecisions in respect of employees, creditors

    etc. and in protecting stakeholders interest.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    25/37

    Independent Directors in the Board

    Counterbalance management weaknesses in acompany.

    Ensure legal & ethical behaviour at thecompany, while strengthening accounting

    controls. Extend the reach of a company through

    expertise, skills and knowledge and access todebt & equity capital.

    Help a company survive, grow, and prosper overtime thru improved succession planning, thrumembership in the nomination committee.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    26/37

    Committees of the Board

    Audit Committee

    Shareholders / Investors Grievance Committee,

    Remuneration Committee (Non mandatory)

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    27/37

    Principles of Effective Governance

    An effective and independent Board A proactive audit committee A compensation committee A nominating committee

    A sound internal control framework A relevant code of ethical behaviour Clear enforced policies and procedures Effective management of risks

    An effective well resourced internal audit function Independent effective external audit Transparent disclosure, effective communication, and

    systems that ensure effective measurement andaccountability

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    28/37

    An Effective and Independent

    Board Appropriate balance of independent and executive

    directors

    Effective mechanism, appropriate competence, adequateexperience, and sufficient information

    Validating and approving the strategy and the operation ofbusiness, providing advice, counsel and feedback to theChief Executive

    Ensure that the personal skills of the Directors are wellaligned with the needs of the company and evolvingregulations and standards

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    29/37

    Vodafone Barclays HSBC GE SingaporeAirlines

    No. of BoardMembers

    18 18-20 22-25 13-17 11-14

    Non- Exec Directors8 9 14 One

    third

    5

    IndependentDirectors

    8 9 11 Twothird

    6

    Frequency of BoardMeetings

    8 11 7 13 4

    Nomtn Commt Yes Yes Yes Yes Yes

    Compentn Commt Yes Yes Yes Yes Yes

    Audit Commt Yes Yes Yes Yes Yes

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    30/37

    An Effective and Independent

    Board Non-Executive Directors are expected to make two visits

    to GE businesses, without management being present

    Management briefing for new directors and independent

    advice available as required- Singapore Airlines

    Annual Review of director independence- Barclays

    Annual Review of Chairmans performance- Vodafone

    ome essent a ua t es o e ect ve o

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    31/37

    Individual directors should have

    Highest standards of personal integrity Excellent judgment and an ability to make informed decisions

    within time constraints Professional credibility

    Capacity to think strategically Demonstrate sound communication skills Sound interpersonal skills Team orientation

    The board, as a whole should ideally have

    Strategic thinking Analytical skills, appropriate professional experience Effective communication skills Knowledge of the organization and the industry

    ome essent a ua t es o e ect ve oof Directors

    Some essential Qualities of effective BO

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    32/37

    Board should have a mix of Directors with skills in

    Law Finance, including accounting expertise Marketing Operations relevant to the Companys activities including other

    key industries in which the company operates Corporate Governance Human Resources Risk Management Merger and Acquisitions Other specific matters relevant to the company

    Some essential Qualities of effective BOcontd

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    33/37

    Role of Board In CG

    Guiding Corporate Strategy, Major Plans ofAction, Risk Policy, Annual Business Plans,

    overseeing major capital expenditures,

    acquisitions and disposals.

    Monitoring managerial performance, conflicts of

    interests of management, board members and

    shareholders.

    Monitoring misuse of corporate assets andabuse in related party transactions.

    Achieving adequate returns for shareholders.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    34/37

    Role of Board In CG

    Compliance with Laws and regulations,including Maintaining integrity of accounting and

    financial reporting systems Internal & operational controls

    Systems for evaluating risk management

    Interests of Stakeholders, such asemployees

    Corporate Social Responsibility

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    35/37

    Best CG

    L &T

    Godrej Consumer Products

    Infosys Wipro

    Tata Motors

    HDFC Dabur

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    36/37

    CG will lead to

    Corporate Excellence

    Profitability

    Satisfied stakeholders such as shareholders,

    customers, employees

    Revenue and profit growth

    Growth in market share

    Growth in market value (Market

    capitalization)

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/
  • 8/4/2019 Coporate Governance Lec 8

    37/37

    Corporate Governance

    Good corporate governance aims at increasingtransparency, accountability, investor protection,compliance with statutory laws and regulationsand value-creation for shareholders and other

    stakeholders.

    A companys most valuable asset is goodwill it

    enjoys with its stakeholders and institutionalinvestors are willing to pay 20% more onaverage for companies with a good governancerecord.

    http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/http://www.ecgi.org/