Efficacy of Independent Directors in Corporate Governance: Indian Scenario

Abstract

Empirical evidences as well as conceptual knowledge on value of independent directors or rationale of their presence in the boards are unusually scarce. Based on random anecdotal evidences, role of independent directors are dismissed as insignificant, indifferent and undesirable. Companies generally appoint or co-opt independent directors to comply with regulatory norms instead of improving governance and ensuring transparency. Interestingly, large numbers of independent directors do not take their job seriously, giving credence to the popular perception about their role and relevance in corporate governance. This paper tries to explore the ground realities vis-à-vis effectiveness of independent directors in ensuring good corporate governance in India.

Keywords: corporate governance, independent directors, India

JEL Classification: G30, G34