1 CHAPTERWISE LEARNING OBJECTIVES CHAPTER 1 Corporate Governance: An Overview

Corporate governance is the new buzzword in corporate and academic circles today. It means several things to several people, depending on the sensitivity of the analyst and his vested interest in it. This chapter gives an overview of the concept, defines it, discusses its evolution and explains its relevance and impact on the economy. CHATPER 2 The Theory and Practice of Corporate Governance

Over the past three decades, the concept of corporate governance has gone through a metamorphosis. Theoretically, from one that was related to agency cost, it is now perceived to encompass everyones interests. This chapter discusses the theoretical basis, mechanisms and the divergent models of corporate governance and culminates in the identification of an ideal corporation. CHAPTER 3 Landmarks in the Emergence of Corporate Governance

Corporate governance, as a desideratum for orderly development of an economy, has evolved over the past three decades and, in its present system and structure, is the outcome of studies, research and the sum total of responses by regulators of corporate scams and debacles. This chapter traverses through the history of evolution of the concept and system of corporate governance over the years, both in the West and in India. CHAPTER 4 Rights and Privileges of Shareholders

The chief purpose and objective of corporate governance is the continued creation and maintenance of long-term shareholder value. While stressing the rights of shareholders as the legitimate owners of a corporationas reinforced by the recommendations of various committeesthis chapter outlines the processes and mechanisms of investor protection. CHAPTER 5 Investors Problems and Protection

The core, essence and substance of corporate governance is long-term shareholder value that can be realised only through investor protection. This chapter studies investor protection needs and problems, and grievance redressal mechanisms that are available in India. CHAPTER 6 Corporate Governance and Other Stakeholders

If long-term shareholder value is the chief purpose and objective of a corporate entity, it is not the be-all and end-all of its existence. It is now ubiquitously agreed that there are other claimants as well that crave for its attention and equitable distribution of its profits. Employees, customers, creditors, institutional investors, government and the community at large are the other stakeholders that vie with the stockholders for a pie of its time and resources. CHAPTER 7 Board of Directors: A Powerful Instrument in Governance

Inevitably and unquestionably, the board of directors of a corporation is the most important instrument that would make it or break it. If a corporation is considered a role model or a beacon, it is in no small measure due to its CEO and a proactive board, while many corporate failures and scams invariably point out to an inactive or obedient board. This chapter goes in depth into all these issues, as well as positive and negative elements connected to the board of directors. CHAPTER 8 Role, Duties and Responsibilities of Auditors

Corporate scams, debacles and subsequent erosion of investor confidence with a deleterious impact on the economy invariably indicate one factaudit failures. An auditor is a key person who as an outsider can bring to light the corrupt and questionable practices indulged in by the insiders. This chapter details the role, liabilities and responsibilities of auditors, and discusses measures that will enable them to do their job of protecting the shareholders and other claimants interests in the resources of a corporationbetter.

CHAPTER 9

Banks and Corporate Governance

The importance of corporate governance in banks cannot be overstressed. They deal in other peoples money many times more than what the shareholders have invested in the corporations that run these banks. Hence, regulation of banks is of utmost importance. This chapter discusses how banks ought to function and how they are regulated with the guidelines outlined by Basel I, and in future by Basel II, under the direction of the Reserve Bank of India.

CHAPTER 10:

Business Ethics and Corporate Governance

Wherever and whenever corporate scams have come to light, it has been found that the concerned organizations have had scant respect for ethical values and have compromised on them. This chapter discusses some unethical issues and how they impact organizations, apart from proving that adhering to ethical values leads to the promotion of long-term enhancement of all stakeholder values. CHAPTER 11 Corporate Social Responsibility

Corporate social responsibility (CSR) is an integral part of corporate governance. Promoting welfare programmes, protecting stakeholders interests, exhibiting social concern, sponsoring social and charitable causes and supplementing states efforts in community development programmes are areas where corporations have a role to play. This chapter defines CSR and explores the possible areas where corporations can exhibit their social activism. CHAPTER 12 Environmental Concerns and Corporations

Environmental concerns are being pushed into the centre stage in corporate behaviour by environmental groups, government intervention, media and judicial activism all over the world. This chapter explores the impact of all these agencies on the management of the environment for the benefit of all those who inhabit the planet Earth, with special reference to India. CHAPTER 13 The Role of Media in Ensuring Corporate Governance

It has been proved time and again that an effective and well-informed media offers the greatest protection to all sections of society, especially the unwary and gullible investors, against wrong-doers and law violators. This chapter discusses the roles and responsibilities of the media in this context and how it is controlled through self-regulating advertising codes. CHAPTER 14 Monopoly, Competition and Corporate Governance

Monopoly goes against the very grain of a market-driven economy and militates against all that it is expected to be achieved in practice. Competition, on the other hand, is the core and essence of a free-enterprise system. This chapter spells out the benefits of competition for stakeholders and how good governance checks abuses of monopoly power. It goes on to explain the rationale behind a good competition policy and how the Indian Competition Act incorporates the salient features of such a policy.

4 CHAPTER 15 The Role of Public Policies in Governing Business

Public policies shape and affect business. National economic policies, for example, affect corporations at different levels through their constituentsmonetary, fiscal and commercial. This chapter analyses the role of public policies in governing business in the context of Indian laws and regulations. CHAPTER 16 SEBI: The Indian Capital Market Regulator

India has put in place a capital market regulator, the Securities and Exchange Board of India (SEBI) to ensure corporate behaviour in alignment with the best global practices. In the context of globalisation, for Indian corporations to attract large capital and technology in order to survive fierce international competition, it is imperative that they adopt governance standards acceptable to global institutional investors. This chapter traces the rationale, genesis, growth, successes and failures of SEBI as a market regulator and offers suggestions to improve its efficacy. CHAPTER 17 The Role of the Government in Ensuring Corporate Governance

Informed opinions have now crystallized to reject the theory that states, That government is the best which governs the least, especially in the context of the corporate sector. Governments today have to be proactive to ensure that corporations run their operations within law and do not defraud the unwary investors. This chapter discusses the role of governments in ensuring corporate governance. CHAPTER 18 Corporate Governance in Developing and Transition Economies

The developing, transitional or emerging economies of the world are at crossroads. Their development efforts cannot overlook the wide distribution of wealth and incomes their corporations generate, nor can they close their eyes to the problem of the insiders stealing the legitimate share of the outsiders. This chapter elaborates on corporate governance challenges in emerging economies that suffer from the lack of institutional arrangements that have evolved over time and are in place now in advanced countries to check corporate abuses. It also discusses successful strategies to ensure corporate governance. CHAPTER 19 Corporate Governance: The Indian Scenario

As a developing economy, India offers a mixed fare with regard to corporate governance. While regulatory institutions have been in place for a long time, they suffer from certain administrative infirmities. As a consequence, their response to corporate scams are slow and they are not able to get the violators penalised. Non-compliance of rules and regulations by wrong-doers makes a mockery of the entire system. This chapter analyses

5 the Indian scenario, the genesis of corporate governance issues, the responses of various stakeholder groups, the initiatives from all sides, legislative changes, the successes and failures of regulators and the future outlook for corporate governance in the country. CHAPTER 20 The Corporation in a Global Society

Notwithstanding the flipside of corporate behaviour, the growth of corporations, especially when they adopt the best practices into global entities, is easily realisable these days. But to attain global stature, they have to manage successfully key global business issues. This chapter also stresses the fact that corporate governance is a prerequisite for globalisation of corporations.