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Corporate Governance Practices In India- An Evaluation

Corporate Governance –Meaning

Corporate governance refers to the system by which corporations are directed and controlled.

Definition

• India's SEBI Committee on Corporate Governance defines corporate governance as the

“ acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders ”.

Objective of the study

To Study the Status of Corporate governance Practices in India

Methodology of the Study

The study is mainly based on secondary data. Data were collected from the “CG Watch” Market Ranking report” of Asian Corporate Governance Association.

Period of the Study

• The present study covers a period of 5 years ranging from 2005 to 2012 .

ACGA

• The Asian Corporate Governance Association (ACGA) is an independent, non-profit membership organization dedicated to working with investors, companies and regulators in the implementation of effective corporate governance practices throughout Asia.

"CG Watch"

• "CG Watch" is a major regional survey undertaken by ACGA in collaboration with CLSA Asia-Pacific Markets. The report looks at the macro corporate governance quality in 11 Asian markets and provides aggregate data on more than 500 companies.

CG Watch 2005: The Holy GrailMarket Category Scores

Rank Country Total CG Rules&

Practices

Enforceme

nt

Political&

Regulatory

IGAAP CG

Culture

1 Singapore 70 74 56 73 95 57

2 Hongkong 69 64 58 78 91 54

3 India 61 66 56 65 75 43

4 Malaysia 56 59 49 60 75 38

5 Taiwan 52 53 49 65 59 33

6 Korea 50 51 40 43 82 39

7 Thailand 50 58 40 50 73 35

8 Philippines 46 53 22 50 82 31

9 China 44 43 40 50 68 22

11 Indonesia 37 33 29 30 68 28

Source : ACGA

CG Watch 2007: On a wing and a prayerMarket Category Scores

Rank Country Total CG Rules&

Practices

Enforceme

nt

Political&

Regulatory

IGAAP CG

Culture

1 Hongkong 67 60 56 73 83 61

2 Singapore 65 70 50 65 88 53

3 India 56 59 38 58 75 50

4 Taiwan 54 49 47 60 70 46

5 Japan 52 43 46 52 72 49

6 Korea 49 45 39 48 68 43

7 Malaysia 49 44 35 56 78 33

8 Thailand 47 58 36 31 70 39

9 China 45 43 33 52 73 25

10 Philippines 41 39 19 38 75 36

11 Indonesia 37 39 22 35 65 25

Source : ACGA

CG Watch 2010: Stray not into perditionMarket Category Scores

Rank Country Total CG Rules&

Practices

Enforceme

nt

Political&

Regulatory

IGAAP CG

Culture

1 Singapore 67 65 60 69 88 53

2 Hongkong 65 59 63 67 80 54

3 Thailand 57 45 53 62 75 53

4 Japan 55 50 47 56 78 46

5 Malaysia 55 56 42 54 73 49

6 Taiwan 52 49 38 60 80 32

7 India 49 46 36 54 63 43

8 China 49 47 36 56 75 30

9 Korea 45 43 28 44 78 33

10 Indonesia 40 39 28 33 67 32

11 Philippines 37 35 15 37 75 25

Source : ACGA

CG Watch 2012: Tremors and CracksMarket Category Scores

Rank Country Total CG Rules&

Practices

Enforceme

nt

Political&

Regulatory

IGAAP CG

Culture

1 Singapore 69 68 64 73 87 54

2 Hongkong 66 62 68 71 75 53

3 Thailand 58 62 44 54 80 50

4 Japan 55 45 57 52 70 53

5 Malaysia 55 52 39 63 80 38

6 Taiwan 53 50 35 56 77 46

7 India 51 49 42 56 63 43

8 Korea 49 43 39 56 75 34

9 China 45 35 33 46 70 30

10 Philippines 41 35 25 44 73 29

11 Indonesia 37 35 22 33 62 33

Source : ACGA

Corporate Governance Practices in India Market Category Scores (%) & Positions – 2005 - 2012

YearRules Enforcement Political &

regulatory

IGAAP CG Culture Total Position

2005 66 56 65 75 43 61 3rd

2007 59 38 58 75 50 56 3rd

2010 46 36 54 63 43 49 7th

2012 49 42 56 63 43 51 7th

Source ACGA

Conclusion

• This paper describes the corporate governance practices followed in India as per the Market Category score of Asian Corporate Governance Association. The study covered various elements of corporate governance practices like rules, enforcement, and corporate governance culture since 2005 etc. India made lots of appreciable activities in concern with corporate governance in the year 2012.Its activities towards the formulation & Implementation of rules was good in the year 2012. In the case of a developing country like India good corporate governance is very important.

•

• Prepared & Presented By• Mr. Santhosh T R

• Junior Research Fellow

• St.Peter's College Kolenchery

• Ernakulam, Kerala

In Association With

Dr Reji M.A

Associate Professor & Research Guide

• St.Peter's College Kolenchery

Ernakulam, Kerala.

Thank You