Independent, Not Free: Corporate Governance in India and China
Posted: 15 May 2013
Date Written: May 1, 2013
The aim of corporate governance as often understood is to ensure that companies that are not managed by their owners are run in the best interest of the shareholder. Based on various studies it appears that good corporate governance plays a vital role in underpinning the integrity and efficiency of financial markets. It appears that the relative ineffectiveness of independent directors is not limited to only China and India. More interestingly, there is no conclusive evidence that independence contributes to the performance of the firm. We conclude that the investors need to be aware that stricter securities laws may not be enough for firms to enhance their governance standards. This isn’t going to help their confidence unless countries improve their policies towards businesses by respecting property rights, fighting corruption, and reducing crime.
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