Corporate Governance – Conceptual Framework
CORPORATE GOVERNANCE – CONCEPTUAL FRAMEWORK
INTRODUCTION:
The great Indian master of Political Science Kautilya mentioned four functions of a king in his well-known book Arthashastra -1.Raksha or protection, 2.Vriddhi or enhancement, 3.Palana or maintenance, and 4.Yogakshema or wellbeing or safeguard. It is the sacred duty of the state to protect the person and property of its subject to enhance their wealth, to maintain them and to safeguard their interest in general. This noble concept can be applied with equal force to company management for corporate governance. The Board of Directors and the CEO or MD are the rulers and the shareholders and other stakeholders associated with the company are the subject. The company should be managed in a way that would protect the interest of shareholders, would increase the value of their wealth and their prosperity, would lead to the welfare of the society and would increase their accountability to them. The corporate world has become so powerful in recent years that corporate governance has caught the imagination and attention of one and all.
India has globalised its economy and has widened the doors for the entry of multinationals. With the onset of globalization, the competition that the corporate sector has been facing has been increased. Technology up-gradation, warranted because of intense competition, has necessitated the Indian corporate sector to seek funds not only from India but also from abroad by floating Global Depository Receipts (GDRs). Large number of foreign institutional investors is now actively participating in the Indian Capital Market. This has also necessitated the need for good governance since capital easily flows towards companies which are effectively governed and which have the motive of increasing the value of shareholders as well as the society.
CONCEPT:
In broad sense, Corporate Governance examines how the company is being governed for the benefit of its various
INTRODUCTION:
The great Indian master of Political Science Kautilya mentioned four functions of a king in his well-known book Arthashastra -1.Raksha or protection, 2.Vriddhi or enhancement, 3.Palana or maintenance, and 4.Yogakshema or wellbeing or safeguard. It is the sacred duty of the state to protect the person and property of its subject to enhance their wealth, to maintain them and to safeguard their interest in general. This noble concept can be applied with equal force to company management for corporate governance. The Board of Directors and the CEO or MD are the rulers and the shareholders and other stakeholders associated with the company are the subject. The company should be managed in a way that would protect the interest of shareholders, would increase the value of their wealth and their prosperity, would lead to the welfare of the society and would increase their accountability to them. The corporate world has become so powerful in recent years that corporate governance has caught the imagination and attention of one and all.
India has globalised its economy and has widened the doors for the entry of multinationals. With the onset of globalization, the competition that the corporate sector has been facing has been increased. Technology up-gradation, warranted because of intense competition, has necessitated the Indian corporate sector to seek funds not only from India but also from abroad by floating Global Depository Receipts (GDRs). Large number of foreign institutional investors is now actively participating in the Indian Capital Market. This has also necessitated the need for good governance since capital easily flows towards companies which are effectively governed and which have the motive of increasing the value of shareholders as well as the society.
CONCEPT:
In broad sense, Corporate Governance examines how the company is being governed for the benefit of its various
Bibliography: 1. Corporate Governance --- N.P.Agarwal Sugan C. Jain 2. Corporate Governance --- H.R. Machhiraju 3. Taxman’s Chartered Accountants Today --- March 16-31,2005 December 16-31,2005