Legal Framework and Corporate Governance: Analysis of Indian Governance System

Abstract

The East-Asian crisis and the Enron debacle have drawn the attention of the scientific community on the issues of financial disclosures and corporate governance. Transparency and good governance is essential to strengthen the financial system and to withstand the any crisis, both internal and external. La Porta et al (2000) argue that the laws dealing with the protection of shareholders and the enforcement of such laws determines the financial strength of any country. In this paper we elaborate the corporate governance mechanisms in the context of the legal framework in India. The Indian legal provisions related to corporate governance is analyzed and the changes in such provisions is suggested to enable the Indian firms perform better in the new global environment.

Keywords: Corporate governance, legal provisions, corporate performance, board structure and leadership structure

JEL Classification: M41, G34, G38