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Levers of Corporate Governance in India: Critical Analysis through Prism of Legal Framework

31 Pages Posted: 10 Feb 2013  

Vrajlal K. Sapovadia

Shanti Business School (SBS)

Akash Patel

Institute of Chartered Accountants of India

Date Written: February 9, 2013

Abstract

Corporate Governance is the relationship between corporate managers, directors and the capital providers, who save and invest their capital to earn money in form of dividend, interest or gain. Shareholders of the company appoint Board of Directors to fulfill their objectives aligned with the corporate objectives. Board of Directors appoints key managers for implementing corporate strategies. Corporate objectives are attained with the series of actions of the directors & managers. Capital & other necessary resources are provided by shareholders and other stakeholders to the company to fulfill the common objectives. It entails responsibility of corporate managers towards investors, society & environment that provides valuable resources to the corporation in achieving their objectives. Good corporate governance practices ensure that the board of directors is accountable for the pursuit of corporate objectives to enhance wealth of corporation and that the corporation itself conforms to the law and regulations in form & spirit. This paper identifies who are the levers of corporate governance and then investigates the powers of those levers, which influences the quality of corporate governance in corporate India. We critically analyze the effectiveness of Indian legal framework to ensure good corporate governance practices. The actors who can influence the quality of corporate governance are depicted in Chart-1 classified into (i) Internal: including shareholders, independent directors, audit & nomination committee and (ii) External: including auditors, Registrar of Companies, stock exchanges, Security Exchange Board of India and the Competition Commission of India.

Keywords: Corporate Governance, Legal framework, India

JEL Classification: G3

Suggested Citation

Sapovadia, Vrajlal K. and Patel, Akash, Levers of Corporate Governance in India: Critical Analysis through Prism of Legal Framework (February 9, 2013). Available at SSRN: https://ssrn.com/abstract=2214441 or http://dx.doi.org/10.2139/ssrn.2214441

Vrajlal K. Sapovadia (Contact Author)

Shanti Business School (SBS) ( email )

Opp. Vral Gardens, Off S. P. Ring Road
Shela
Ahmedabad, Gujarat 380058
India

HOME PAGE: http://www.shantibschool.edu.in

Akash Patel

Institute of Chartered Accountants of India

Indraprastha Marg,
Post Box. No. 7100
New Delhi, New Delhi 1110002
India

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