Corporate Governance Rating in India

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Sustainable growth and success of any country or society depend upon collective function of its resources, starting from the vast use of natural resources, strategic, geographic location, labour (people) and intellectual capital. In a society where private participants have prominent role in utilization of all these resources, governance or public governance plays a vital role in sustainable development of the society. Governance, as it is said relates to decisions that define expectations, grant power or verify performance. It consists either of a separate process or of a specific part of management or leadership processes. Sometimes people set up a government to administer these processes and systems.1 Public governance is more complex but important in all kinds of society. It is involved in the most of the aspects of society, in one and another way. Relevance of public governance determines culture, quality of life, and sustainable development of society. A complete public governance system with all its strengths will help to build a great and potential culture and society. Like public governance, corporate governance is governance of affairs of a company by its stakeholders. As public governance is people’s democracy, corporate governance is stakeholders’ democracy. Corporate governance looks at the complete governance of corporations from their very beginning in entrepreneurship, through their governance structures, legal framework, privatizations, to market exit and insolvency. The integrity of corporations, financial institutions and markets is particularly central to the health of our economics and their stability. Good governance creates a strong future for an organization by continuously steering towards a vision and making sure that day-to-day management is always lined up with the organization's goals. ***The basic objective of corporate governance (CG) in companies is to maximize shareholders’ value in the context of its corporate mission by considering a balance between goals and efficient use of resources. Long-run viability, more-efficient resource allocation and elimination of the uncertainties are the other primary benefits of corporate governance2 (Aras, 2008). It can be defined as an approach of public responsibility to business management in order to strengthen the relationship of the society with the private corporate sector. This relationship had to be based on trust, ethical behaviour, moral values and confidence created by the transparency of real financial results, accountable and responsible business managers and members of the Board of Directors of corporations3 (Aysan, 2008). It is true that there can not be a single corporate governance model for each and every country as cultural differences are too great (Aras & Crowther, 2008d) but good corporate governance should upheld four basic principles that are accepted and valid globally. These are equality, transparency, accountability and responsibility. In line with these principles, corporate governance aims to protect the rights of all stakeholders (directors, board of directors, shareholders, corporate investors, foreign partners, employees, customers, competitors, suppliers, society and government) that have direct or indirect relations with the company (ICAEW, 2008a). One reason for the emergence of corporate governance is certainly the financial crises (1997 Asian Crisis, 1998 Russian Crisis) faced in I 990s and the consequent corporate scandals (Enron, Worldcom and Global Crossing in USA, Parmalat in Italy, Ahold in the Netherlands, Yanguangxia in China, Satyam Computers in India, etc.) The insufficiency of corporate governance policies of public and private sector is one of the reasons behind these international financial crisis and corporate scandals. Corporate governance, however, should neither be viewed as mere policing against fraudulent practices nor would it be wise to consider it as an off-shoot of globalization and the...
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