What is Corporate Governance?

Context In light of Tata, Infosys, ICICI & PNB bank corporate governance episodes lately, the
debate around transparency, role of Independent Directors, promoters etc among others got
wide attention to further enhance corporate governance in India.

What is Corporate Governance?

Corporate Governance deals with how a corporate is governed.Corporate governance

is the system of rules, practices and processes by which a firm is directed and
controlled.

þÿCorporate governance essentially involves balancing the interests of a company s many

stakeholders, such as shareholders, management, customers, suppliers, financiers,
government and the community.

Need for a corporate governance

Changing Ownership Structure

Wide spread of investor

Corporate Scams or Scandals

Greater Expectations of Society of the Corporate Sector:

Hostile Take-Overs

Huge Increase in Top Management Compensation

Globalisation

Deregulation and capital market integration

Examples of failure of corporate governance in India Harshad Mehta case: role of regulator
Satyam Scam: failure of auditing ICICI bank: Conflict of Interest PNB fraud: Internal
Mechanism Tata Case: Role of promoter Infosys Case: Role of Independent Director