AWARENESS OF CORPORATE GOVERANCE IN
EMPLOYEES: A STUDY OF PROFESSIONALS AND NONPROFESSIONALS
Prestige Institute of Management
Prestige Institute of Management
S. S. BHAKAR
Prestige Institute of Management
Corporate governance has recently emerged as an issue of global significance. The present era is of intense global competition with customers becoming more knowledgeable and demanding. Not only the customers but also the shareholders are becoming increasingly aware of the present competitive environment. Customers rank firms based on ability to invest and manage physical assets, competition and the ability to exploit intangible assets, transparency of operations and soft assets. There is some evidence, albeit inconclusive, to suggest that there is a positive relationship between corporate governance and improvements in corporate performance. The paper investigates the awareness level of corporate governance among professionals and non professionals in Gwalior region. The study resulted in six underlying factors for corporate governance viz., social responsibility, legal system, competitive advantage, long term, transparent system, and healthier practice. The findings of the paper reveals that the there is no significant difference in the awareness of corporate governance among professionals and non-professionals. Also results of the z test applied between professionals and non-professionals for the difference in factors gave the similar results. Only for one factor competitive advantage, the level of awareness among professionals and non professionals was found to be different.
In its narrowest sense, corporate governance is about how an organization is directed and controlled. It is about the structures and processes in place to facilitate and monitor effective management of an organization, including mechanisms to ensure legal compliance and prevent improper or unlawful behavior. Corporate governance encompasses how an organization is managed, its corporate and other structures, its culture, its policies and strategies, and the ways in which it deals with its various stakeholders. Broadly, governance involves the systems and processes in place that shape, enable and oversee management of an organization.
Corporate governance involves two dimensions, which are the responsibility of the board (or governing body/individual), performance and conformance. There are some commonly accepted key principles or elements of good governance that are applicable to both the public and private sectors. The three most common principles are: accountability – both internal and external; transparency/openness; and recognition of stakeholder/shareholder rights. Often to these are added: efficiency, integrity,
stewardship, leadership, and an emphasis on performance as well as compliance, and stakeholder participation or inclusiveness.
REVIEW OF LITERATURE
Research into the theory and practice of corporate governance has been heavily focused in English speaking countries and the United States in particular. Most of the available empirical evidence comes from the United States like Shleifer and Vishny (1997). Hollingsworth et al. (1994) stated that in the 1950s and 1960s hardly anyone disagreed with the assumption that the more traditional methods of governance needed to be changed and therefore, backward economies like Japan, Germany, or Europe as a whole would have to adopt American pattern of industry organization. Dalton and Daily (1999) stated that corporate governance is the process by which corporation is made responsive to the rights and wishes of stakeholder. Morck (1988), wrote that it is the relationship among various participants in determining the direction and performance of corporation. While Jensen and Meckling (1976), Fama and Jensen (1983), Eisenhardt (1989) suggested that corporate governance should enable owners to exercise control over...
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