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Corporate leaders should practice good corporate citizenship not merely for the sake of complying with rules and regulations in order to avoid fines—or worse, prison—but to create value for their shareholders (Baporikar, N., 2015a). The silver lining in the dark cloud of corporate misconduct is the intense focus on corporate governance by board members, corporate managers, policymakers, media and especially, investors. The well-publicized scandals at Enron Corporation, Tyco International, and WorldCom/MCI, latter Satyam and Shraddha Chit Funds together with transgressions within the asset management, insurance, and securities industries, have brought back the focus on the issue of corporate governance.
India, though not much adversely affected by the global financial crisis has been unnerved by the largest corporate accounting scandal at Satyam Computers Limited. According to an estimate shareholder and investors have lost not less than $2.8 billion (Tellis, 2009). It is now well understood that corporate misconduct has very unpleasant consequences, not only for those who perpetrate the misdeeds but also for employees and shareholders whose jobs and wealth are destroyed thereby leading to decline in value creation for the individual stakeholder and society at large. Hence, the term ‘corporate governance’ though only two decades old, has evolved with the incorporation of modern day business structure albeit in latent form (Singh & Kumar, 2009). Recent Satyam fraud further gives some evidence that dominant shareholders and some employees were involved in insider trading (Singh, Kumar & Uzma, 2010). Satyam- Maytas deal resulting in exposure of Satyam scandal is a typical example (Sharma, 2011) of not only poor corporate governance but also of negative value creation. Over the past two decades, there has been a sea change in Indian corporate governance. The chronological development can be seen below:
1996: Confederation of Indian Industry’ (CII) CG Task Force
1998: CII Code
1999: Security and Exchange Board of India (SEBI) Appointed Birla Committee
2000: Enactment of Clause 49
2002: SEBI Appointed Murthy Committee
2002: MCA Appointed Chandra Committee
2003: Companies Bill (2003) Considered
2004: MCA Appointed Irani Committee and Clause 49 Amended
2006: Clause 49 Amendments Implemented
2008: Companies Bill (2008) Considered
2009: Satyam Scandal, Companies Bill, Considered MCA Voluntary and CCI CG Guidelines
2010: NASSCOM CG Recommendations and Listing Agreement Amended
2013: Companies Act