Jayashree Sadri and Sorab SadriCORPORATE GOVERNANCEGenesis and International DevelopmentsProfessor Jayashree SadriAndDr So...
Jayashree Sadri and Sorab SadriBasis This presentation is largely based on theSadri, Jayashree and Ajgaokar work of 2002a...
Jayashree Sadri and Sorab SadriWhat is Corporate Governance ? Concept originated with the separation ofownership and mana...
Jayashree Sadri and Sorab SadriA Suggested Definition …… Systems, procedures and institutionsthat ensure that management ...
Jayashree Sadri and Sorab SadriCorporate Governance FurtherDefined Shareholder Versus Stakeholder debatecontinues………. Mo...
Jayashree Sadri and Sorab SadriCorporate Governance Systems CG systems and structure differ in historical andlocal condit...
Jayashree Sadri and Sorab SadriCorporate Governance Tripod Three key players or pillars of CG are: Shareholders or owner...
Jayashree Sadri and Sorab SadriWhy is CG Imperative for India ? Immediate Factors Closely on the heels of corporatedebac...
Jayashree Sadri and Sorab SadriCG…. Why is it an Imperative forIndia ? Structural Factors: Globalization of markets Ind...
Jayashree Sadri and Sorab SadriCG….. Developments in U.K. Cadbury Committee Report 1992 A baseline consensus in UK’s fin...
Jayashree Sadri and Sorab SadriCG…… Developments in UK Greenbury Committee Report 1995Focuses on Executives &Directors’ R...
Jayashree Sadri and Sorab SadriCG…….. Developments in USA California Public Employees Retirement Systems(CalPERS) - Large...
Jayashree Sadri and Sorab SadriCG……. German Model A Unique System of Two Tier Boards Supervisory Board Managerial Board...
Jayashree Sadri and Sorab SadriCG…. Developments in Japan CG Forum of Japan (consisting ofcorporations, institutional inv...
Jayashree Sadri and Sorab SadriCG………. OECD Principles Organization of Economic Co-operation andDevelopment (OECD) Princip...
Jayashree Sadri and Sorab SadriCG…… ImplementationModalities Available Options are - Through general legislation Throug...
Jayashree Sadri and Sorab SadriImplementation Choices Most experts are averse to generallyapplicable standards & legal in...
Jayashree Sadri and Sorab SadriTherefore The judicious mix has to be indigenous andfounded on business ethics. It has to...
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Corporate governance genesis and international developments

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Corporate governance genesis and international developments

  1. 1. Jayashree Sadri and Sorab SadriCORPORATE GOVERNANCEGenesis and International DevelopmentsProfessor Jayashree SadriAndDr Sorab Sadri
  2. 2. Jayashree Sadri and Sorab SadriBasis This presentation is largely based on theSadri, Jayashree and Ajgaokar work of 2002as well as the Jayashree, Sadri and Dastoorwork of 2008. Inputs from Dr S N Tara, Dr Bindi Mehta andProf. J. Oke are acknowledged. This has all culminated in the Sadri andJayashree work of 2009.
  3. 3. Jayashree Sadri and Sorab SadriWhat is Corporate Governance ? Concept originated with the separation ofownership and management Corporatist business and increasing scales ofoperation Origin can be traced back to “Agency Theory”propounded by Berle and Means
  4. 4. Jayashree Sadri and Sorab SadriA Suggested Definition …… Systems, procedures and institutionsthat ensure that management acts in the bestinterests of the owners (shareholders) Ongoing debate about whether it should beshareholders’ interest or all stakeholders’interest (including employees, customersenvironment and community at large) that themanagement should serve
  5. 5. Jayashree Sadri and Sorab SadriCorporate Governance FurtherDefined Shareholder Versus Stakeholder debatecontinues………. Moot point is the timeframe Interests of both / all are bound to convergein the long run In the long run, sustainability of the enterpriseis important
  6. 6. Jayashree Sadri and Sorab SadriCorporate Governance Systems CG systems and structure differ in historical andlocal condition specific contexts - Forms of Organizations in enterprises Entrepreneurial form Banking dominated form Managerial form Institutional form Democratic corporate form
  7. 7. Jayashree Sadri and Sorab SadriCorporate Governance Tripod Three key players or pillars of CG are: Shareholders or owners Board of Directors Management Interests may not coincide and balancingdivergent and conflicting interests becomescrucial. A responsible role of the Fourth Estate canand does work wonders.
  8. 8. Jayashree Sadri and Sorab SadriWhy is CG Imperative for India ? Immediate Factors Closely on the heels of corporatedebacles Vanishing companies Corporate frauds Ratings downgrades
  9. 9. Jayashree Sadri and Sorab SadriCG…. Why is it an Imperative forIndia ? Structural Factors: Globalization of markets Indian companies are tapping globalmarkets for resources Stock markets are getting institutionalized These factors are fast forwarding the Indiancompanies into adopting internationalstandards and best practices
  10. 10. Jayashree Sadri and Sorab SadriCG….. Developments in U.K. Cadbury Committee Report 1992 A baseline consensus in UK’s financialcommunity Primarily focusing on accountability aspects Improved information to shareholders Strengthening auditor’s independence
  11. 11. Jayashree Sadri and Sorab SadriCG…… Developments in UK Greenbury Committee Report 1995Focuses on Executives &Directors’ Role & Compensation Myner Committee Report 1995 Winning partnerships between owners andmanagement Role of institutional investors
  12. 12. Jayashree Sadri and Sorab SadriCG…….. Developments in USA California Public Employees Retirement Systems(CalPERS) - Largest public pension plan in the USA,World’s 3rd largest CG through shareholder activism “Global Governance Principles” Accountability,Transparency, Equity, Voting method improvementsand Long term vision
  13. 13. Jayashree Sadri and Sorab SadriCG……. German Model A Unique System of Two Tier Boards Supervisory Board Managerial Board No official codes, but many provisionsin company legislation Of late, demand for professionalisingsupervisory boards and importance toindividual shareholders
  14. 14. Jayashree Sadri and Sorab SadriCG…. Developments in Japan CG Forum of Japan (consisting ofcorporations, institutional investors &academia) Short / medium term suggested measuresare - Size of Japanese boards to be reduced Truly independent auditors Reduction in cross shareholding
  15. 15. Jayashree Sadri and Sorab SadriCG………. OECD Principles Organization of Economic Co-operation andDevelopment (OECD) Principles Intended to assist member governments inevaluating their legal, institutional andregulatory framework Shareholders’ Rights Board Responsibilities Disclosures & Transparency
  16. 16. Jayashree Sadri and Sorab SadriCG…… ImplementationModalities Available Options are - Through general legislation Through stock exchanges Through independent & well publicized ratings Through institutional activism & nomineedirectors Through Self Regulation
  17. 17. Jayashree Sadri and Sorab SadriImplementation Choices Most experts are averse to generallyapplicable standards & legal intervention Internationally, self- regulation, linked toopenness and accountability, seems togenerate the maximum support Self - regulation may not work in India in theforeseeable future - A judicious mix of all thefour approaches (UK, USA, German andJapanese) may be required
  18. 18. Jayashree Sadri and Sorab SadriTherefore The judicious mix has to be indigenous andfounded on business ethics. It has to evolve over a period of time. The inputs of People Management expertsand Business Strategists must combine withthose of Company Secretaries and CharteredAccountants to generate this mix. Must have the implicit and explicit support oftop management.

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