Acta Univ. Agric. Silvic. Mendelianae Brun. 2018, 66(6), 1459-1467 | DOI: 10.11118/actaun201866061459

Corporate Governance Structures in Transition Economies - Issues and Concerns for India

Pankaj Kumar Gupta1, Shallu Singh2
1 Centre for Management Studies, JMI University, Centre for Management Studies Road, Jamia Millia Islamia, Jamia Nagar, Okhla, New Delhi, Delhi 110025, Indie
2 Delhi College of Arts and Commerce, University of Delhi, Block E, Netaji Nagar, New Delhi, Delhi 110023, Indie

Corporate Governance (CG) has become an important concern for transition economies like India worldwide economies with increasing dynamism of socio-economic environment. Sound system of governance is essential to the economic development of any nation that essentially requires a well-defined legislation, adoption of ethical standards and efficient market structures. Compared to developed economies, CG system in transition economies including BRICS nations is still an unbalanced one and evolving. The objective of this paper is to examine the present status of CG structure in India on certain selected CG parameters, legal and regulatory framework, and compare with the CG structures in other transition economies (BRICS). We use the sample of top 100 companies listed on National Stock Exchange to evaluate them on selected parameters. We examine the Indian corporate sector for transparency, compliances and ethics using reports of national and international agencies. We find that CG structure is weak, unreliable with concentration of controls and instances of growing corporate frauds with poor monitoring system fuelled by a variety of regulators. We suggest that an effective CG code must be developed to overcome these issues in the best interest of society and economy.

Keywords: corporate governance, board of directors, stakeholders, legal framework

Published: December 19, 2018  Show citation

ACS AIP APA ASA Harvard Chicago IEEE ISO690 MLA NLM Turabian Vancouver
Gupta, P.K., & Singh, S. (2018). Corporate Governance Structures in Transition Economies - Issues and Concerns for India. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 66(6), 1459-1467. doi: 10.11118/actaun201866061459
Share...
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. ARESTIS, P., DEMETRIADES, P. O. and LUINTEL, K. B. 2001. Financial Development and Economic Growth: The Role of Stock Markets, Journal of Money, Credit and Banking, 33(1): 16-41. DOI: 10.2307/2673870 Go to original source...
    2. BABIC, V. and JANOSEVIC, S. 2001. How to Improve the Process of Strategic Change Management in Transition Economy Enterprises. In: Strategic Management Society 21st Annual International Conference. San Francisco, October.
    3. BABIC, V. M. 2001. Ključniaspektiupravljačkogrestrukturiranjapreduzeća u uslovimatranzicije, Ekonomist, 332: 133-43.
    4. BABIC, V. M. 2003. Corporate governance problems in transition economy. Social science research seminar. Wake Forest University. [Online]. Available at: http://www.wfu.edu/~caron/ssrs [Accessed: 2017, December 12].
    5. BALASUBRAMANYAM, V. N. and SAPSFORD, D. 2007. Does India need a lot more FDI. Economic and Political Weekly, 42(17): 1549-1555.
    6. BASU, P., NAYAK, N. C. and ARCHANA, V. 2007. Foreign Direct Investment in India: Emerging Horizon, Indian Economic Review, 42(2): 255-266.
    7. BELIKOV, I. 2013. Corporate Governance: The Russian Experience and Beyond Russian Institute of Directors. Transparency Lebanon. [Online]. Available at: http://www.transparency-lebanon.org/publications/casestudiesen.pdf [Accessed: 2013, June 20].
    8. CADBURY, A. 1992. Report of the Committee on the Financial Aspects of Corporate Governance. London: Gee.
    9. CARATI, G. and TOURANI RAD, A. 2000. Convergence of Corporate Governance Systems, Managerial Finance, 2610: 66-86. DOI: 10.1108/03074350010766945 Go to original source...
    10. CHAKRABARTI, R., MEGGINSON, W. L. and YADAV, P. K. 2008. Corporate Governance in India. Journal of Applied Corporate Finance, 20(1): 59-72. DOI: 10.1111/j.1745-6622.2008.00169.x Go to original source...
    11. CHAUDHURY, S. K., DAS, S. K. and MISHRA, D. P. 2011. Corporate Governance Practices in Selected Indian Financial Institutions. European Journal of Business and Economics, 5: 39. Go to original source...
    12. CIPE. 2002. Instituting Corporate Governance in Developing, Emerging and Transitional Economies - A Handbook. Center for International Private Enterprise.
    13. COFFEE, J. C. JR. 2001. The rise of dispersed ownership: The roles of law and the state in the separation of ownership and control, Yale Law Journal, 111(1): 1-82. DOI: 10.2307/797515 Go to original source...
    14. CORPGOV. 2013. Improving accountability through democratic corporate governance since 1995. Corporate Governance. [Online]. Available at: https://www.corpgov.net/library/corporate-governance-defined [Accessed: 2016, May 14].
    15. DAINES, R. and JONES, C. 2007. Mandatory disclosure, information asymmetry and liquidity: The effect of the 1934 Act. Working Paper. [Online]. Available at: http://www.law.yale.edu/documents/pdf/CBL/34_Yale.pdf [Accessed: 2017, June 22].
    16. DAS, P. K. 2011. Towards Corporate Governance of Microfinance Institutions MFIs In India. Working Paper No. SRM/KIIT/2. Orrisa. India: KIIT School of Rural Management, KIIT University.
    17. DAVIS, F. G. and USEEM, M. 2000. Top Management, Company Directors, and Corporate Control. In: PETTIGREW, A., THOMAS, H. and WHITTINGTON, R. (Eds.). Handbook of Strategy and Management. Available at: http://www/calpers-governance.org [Accessed: 2015, February 10].
    18. FINANCIAL TIMES. 2011. Definition of Corporate Governance. The Financial Times. [Online]. Available at: http://lexicon.ft.com/Term?term=corporate-governance [Accessed: 2011, July 20].
    19. GALLO, F., CHIACHIO, R. and CAVOUR MUNIZ, C. 2017. Corporate governance and directors' duties in Brazil: overview. UK Practice Law.
    20. GEDALOVIC, E. and SHAPIRO, D. M. 2002. Ownership Structure and Firm Profitability in Japan, Academy of Management Journal, 45(2): 565-575. Go to original source...
    21. GII. 2017. Global Innovation Index Report 2017. Global Innovation Index. Available at: https://www.globalinnovationindex.org [Accessed: 2018, February 2].
    22. GILL, A. 2008. Corporate Governance as Social Responsibility: A Research Agenda, Berkeley J. Int'l Law, 26(2): 452-478.
    23. GOERGEN FIDRMUC, J. P. M. and RENNEBOOG, L. 2006. Insider trading, news releases, and ownership concentration. The Journal of Finance, 61(6): 2931-2973. DOI: 10.1111/j.1540-6261.2006.01008.x Go to original source...
    24. GOWD, T. N., JITENDRA, G. and VENUGOPAL, B. 2011. Corporate Governance Practices in Indian Banks and Financial Institutions, Zenith International Journal of Multidisciplinary Research, 3: 5.
    25. HABBARD, P. 2010. Corporate Governance in Brazil - An International Trade Union Perspective. Trade Union Advisory Committee. [Online]. Available at: https://members.tuac.org/fr/public/e-docs/00/00/06/F0/document_doc.phtml [Accessed: 2016, November 15].
    26. ICSI. 2017. Corporate Governance. [Online]. Available at: http://www.icsi.edu/webmodules/icsiweb/works/Schdiary/.../Corporate%20Governance.doc [Accessed: 2017, October 10].
    27. INSTITUTE OF DIRECTORS, SA. 2017. KING IV report on Corporate Governance. [Online]. Available at: https://c.ymcdn.com/sites/iodsa.site-ym.com/resource/collection/.../IoDSA_King_IV_Report_-WebVersion.pdf [Accessed: 2018, September 23].
    28. JACKSON, H. E. and ROE, M. J. 2009. Public enforcement of securities laws: Preliminary evidence. Journal of Financial Economics, 93(2): 207-238. DOI: 10.1016/j.jfineco.2008.08.006 Go to original source...
    29. KAR PRATIP, 2011, Dialectics of culture and corporate governance. Business Standard. [Online]. Available at http://www.business-standard.com/article/opinion/pratip-kar-dialectics-of-culture-corporate-governance [Accessed: 2014, March 15].
    30. KHANNA, V. 2009. Law Enforcement and Stock Market Development: Evidence from India. CDDRL Working Papers. CDDRL.
    31. KPMG. 2010. Corporate Governance Advisory in KPMG in India Corporate Governance Advisory Services. [Online]. Available at: https://home.kpmg.com/in/en/home/services/advisory/risk-consulting/governance-risk-compliance-services/corporate-governance-advisory.html [Accessed: 2016, May 29].
    32. KULWINDAR, S. 2005. Foreign Direct Investment in India: A Critical analysis of FDI from 1991 - 2005. Centre for Civil society. [Online]. Available at: https://papers.ssrn.com/sol3/papers.cfm_id_822584 [Accessed: 2016, August 20].
    33. MAJUMDAR, S. K. and CHHIBBER, P. 1999. Capital structure and performance: Evidence from a transition economy on an aspect of corporate governance. Public Choice, 98(3 - 4): 287-305. DOI: 10.1023/A:1018355127454 Go to original source...
    34. MALHERBE, S. and SEGAL, N. 2007. Corporate Governance in South Africa. [Online]. Available at: http://www.tips.org.za/publication/corporate-governance-south-africa [Accessed: 2016, August 25].
    35. MILHAUPT, C. J. and PISTOR, K. 2008. Law and capitalism: What corporate crises reveal about legal systems and economic development around the world. Columbia Law and Economics Working Paper No. 313. Columbia university. [Online]. Available at: http://ssrn.com/abstract=987291 [Accessed: 2010, August 18]. Go to original source...
    36. NSE. 2005. Indian Securities Market - A Review ISMA. NSE India. [Online]. Available at: https://www.nseindia.com/education/content/prs_publications.htm [Accessed: 2017, June 12].
    37. OECD. 2004. OECD Principles of Corporate Governance. OECD. [Online]. Available at: https://www.oecd.org/corporate/ca/corporategovernanceprinciples/31557724.pdf [Accessed: 2016, November 5]. Go to original source...
    38. PEDRONI, P. 2001. Fully Modified OLS for Heterogeneous Cointegrated Panels. In: Panel Cointegration and Dynamic Panels. Emerald Publishing, pp. 93-130. Go to original source...
    39. RAJAN, R. G. and ZINGALES, L. 2003. The Great Reversals: The Politics of Financial Development in the 20th Century. Journal of Financial Economics, 69(1): 5-50. DOI: 10.1016/S0304-405X(03)00125-9 Go to original source...
    40. RAY, A. 2018. How PNB Rs 11,300 crore scam exposes the biggest flaws in the Indian banking system. ET Bureau. The Economic Times. [Online]. Available at: http://economictimes.indiatimes.com/articleshow/62938356.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst [Accessed: 2018, February 22].
    41. RAZEEN, S. 2017. Corporate Governance with Chinese Characteristics: The Case of State Owned Enterprises. University of Oxford. [Online]. Available at: https://www.law.ox.ac.uk/business-law-blog/blog/2017/05/corporate-governance-chinese-characteristics-case-state-owned [Accessed: 2018, February 22].
    42. ROE, M. J. and SIEGEL, J. I. 2009. Political instability: Its effects on financial development, its roots in the severity of economic inequality. [Online]. Available at: http://papers.ssrn.com/sol3/papers.cfm [Accessed: 2012, August 18].
    43. SASIDHARAN, S. and RAMANATHAN, A. 2007. Foreign Direct Investment and Spillovers: Evidence from Indian Manufacturing. MERIT Working Papers 010. United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT). Go to original source...
    44. SEBI. 2003. SEBI report on Corporate Governance. [Online]. Available at: http://www.sebi.gov.in/cms/sebi_data/attachdocs/1293094958536.pdf [Accessed: 2017, January 2].
    45. SIFUNA, A. P. 2012. Disclose or Abstain: The Prohibition of Insider Trading on Trial. Journal of International Banking Law and Regulation, 27(9): 340-535.
    46. SOLANKI, G. A. 2012. Corporate Fraud: It's Time to Regulate. International Interdisciplinary Research Journal, 2(5): 138-142.
    47. SWAPNA, S. S. 2007. Comparative Analysis of FDI in China and India: Can Laggards Learn from Leaders? Dissertation Thesis. Available at: www.bookpump.com/dps/pdf-b/1123981b.pdf [Accessed: 2017, January 13].
    48. THOMSON, L. M. 2009. What is corporate governance? The Economic Times. [Online]. Available at: https://economictimes.indiatimes.com/money-you/what-is-corporate-governance/articleshow/3995278.cms [Accessed: 2016, July 8].
    49. UNADKAT, K. 2017. Top Ten Issues in Corporate Governance Practices in India. [Online]. Available at: http://www.acc.com/legalresources/publications/topten/tticgpi.cfm [Accessed: 2018, February 12].
    50. VARMA, J. R. 1997. Jayanth Rama Varma report on Corporate Governance in India: Disciplining the Dominant Shareholder. [Online]. Available at: https://faculty.iima.ac.in/~jrvarma/papers/iimbr9-4.pdf [Accessed: 2016, July 9].
    51. WORLD BANK. 1999. Corporate Governance: A framework for Implementation. Available at: https://documents.worldbank.org/curated/en/831651468781818619/pdf/30446.pdf [Accessed: 2018, February 12].
    52. WORLD BANK. 2018. Corporate Governance in Transition Economies. Available at: http://documents.worldbank.org/curated/en/.../pdf/823220REVISED00RMAT0final019Mar2014.pdf [Accessed: 2018, September 23].
    53. ZÖLLNER, C. 2013. Corporate Governance in China. [Online]. Available at: https://www.wiso.uni-hamburg.de/.../ECG_-_CG_in_China_FINAL.pptx[Accessed: 2016, July 5].
    54. ZULIU, H. 1995. Stock market Volatility and Corporate Investment. IMF Working Paper. 95/102. IMF. Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content