Business Ethics and corporate governance of the company covering financial aspects. MBA slides presented in G5 Submit UN online.

1. The effects of corporate governance policies
on the financial performance of big
corporations in India
Presented by; Group 5
Sanjana Nair Manasvi Khandelwal Ayush Chaturvedi
Arka Roy Vijay Kumar Thakur Ninad Paranjpe
Siddharth Jadhav

2. Introduction
CORPORATE GOVERNANCE:
Corporate governance is the combination of rules, processes or laws by
which businesses are operated, regulated or controlled. The term
encompasses the internal and external factors that affect the interests of a
company's stakeholders, including shareholders, customers, suppliers,
government regulators and management.
Corporate governance is an important components structure. Under
section 177 of Companies Act, 2013

4. ⦿ Corporate governance is about maximizing shareholder value
legally, ethically and on a sustainable basis.
⦿ It is about promoting corporate fairness, transparency and
accountability. For this purpose efficient, high quality system of
corporate governance becomes critical.
⦿ Corporate governance is a concept, rather than an
individual instrument. It includes debate on the appropriate
management and control structures of a company.

5. Recent Developments in Corporate
Governance w.r.t finance

6. ⦿ Clause 49 was adopted by SEBI in 1999 from the code of governance developed by
Confederation of Indian Industry (CII), an independent organization working with
government on policy issues. It has been revised time to time to ensure better
compliance.
⦿ Ministry of Corporate Affairs, Government of India published ‘National Voluntary
Guidelines’ in 2011. The guidelines make it mandatory for the listed companies to file
Business Responsibility Report (BRR) to enhance the quality of disclosures.
⦿ The enactment of the companies Act 2013 replaces the Companies Act, 1956 and
aims to improve corporate governance standards to simplify regulations and
enhance the interests of minority shareholders.
⦿ As per the latest revision in 2014, clause 49 includes protection of shareholders
rights, proper and timely disclosures, Chief Financial Officer (CFO) certification of
financial statements, equitable treatment of shareholders, enhance responsibility of
board and norms for preventing insider trading.

7. Financial functioning

8. Unethical Practices In Finance
➢ Deliberate abnormal delays in
payments.
➢ Delays in payment of wages and
incentives to employees
➢ Holding of bills
➢ Not prompt in statutory payments like
Sales Tax, Excise duties.
➢ Cheating employees for their dues
towards medical expenses and children
education fees

9. Continued
➢ Opening of multiple current accounts
to avoid adjustments against loan.
➢ Purchase of bogus bills to show
higher cost.
➢ Quick release of payments to known
parties.
➢ Accepting private finance in order to
do personal favours.
➢ Example of this can be Miss-Selling.

10. Mis - Selling Example
➢ The case of Suchitra
Krishnamoorthi with respect to
HSBC Bank.
➢ Involvement of SEBI.
➢ A single sheet should state the
product details and risk profile
and the sheet should be signed
by the seller

11. Need of corporate governance in
financial function
The role of corporate governance is to
minimize the loss of value that may
result from the separation of ownership
and control. Thus, the corporate
governance structure is centered on the
establishment and maintenance of
adequate and effective internal control
systems to protect assets from loss or
theft.

12. The principal-agent model of relationships refers to an
arrangement whereby one party, acting as an agent for
another, carries out certain functions on behalf of that
other. Such arrangements are an integral part of the
modern economic and financial system
❏ Nishkalpa a wholly-owned subsidiary of TATA
Finance Ltd. (TFL)made a loss of 79.37 crores.
❏ This information was price sensitive as it would
lead to a fall in prices if leaked.
❏ He leaked this price-sensitive information to his
wife 90,000 shares which were held by his wife
were sold in order to avoid losses

13. Corporate governance affect
on financial performance

14. Financial Performance
Financial performance is a subjective measure of how well a firm can use assets from its
primary mode of business and generate revenues. The term is also used as a general
measure of a firm's overall financial health over a given period.
There are many ways to measure financial performance, but all measures should be taken in
aggregate. Line items, such as revenue from operations,poration income, or cash flow from
operations can be used, as well as total unit sales. Furthermore, the analyst or investor may
wish to look deeper into financial statements and seek out margin growth rates or any
declining debt.Six Sigma methods focus on this aspect.
Key Indicators of financial performance of company
1. Balance Sheet,
2. Income Statement

15. How does corporate governance
affect financial performance?
1. Evidence from the past studies have revealed that corporate governance improves
the firm's financial performance either it is in developed world or under developed
country. Study results shows that those firms where outside directors are present, they
show abnormal return on the investment.
1. Corporate governance affects the development and functioning of capital markets
and exerts a strong influence on resource allocation. It impacts upon the behaviour
and performance of firms, innovative activity, entrepreneurship, and the development
of an active SME sector.
1. Better corporate performance support the hypothesis that good governance
enhances corporate performance, as it produces six governance variables with an
academically proven positive impact on performance
E.G. Financial Markets

16. Corporate Governance chart
The structure of corporate governance
determines the distribution of rights and
responsibilities between the different
parties in the organization and sets the
decision-making rules and procedures. It
is usually up to the management board
to decide how the company will develop.

17. Internal Performance of
Organization
Internal performance are used to assess and monitor the internal operation of an
organization. These are essentially measures of processes. For a manufacturing organization,
they could include measures such as equipment utilization, set up times, work in progress
levels, queues, etc. As these measures are often directly related to specific activities they can
be used for identifying opportunities for improvement. Internal performance measures do
not always capture the competitive position of a company. For example, set up time does not
by itself is not an indicator of the competitive position of a company, but reducing setup time
may enable a company to offer faster deliveries which may improve its competitive position.
However, reduced setup times may result in an improvement in the external performance
measure, ‘delivery lead time’.

18. Example - Google
Google has everything that an employee would
expect from one of the largest companies in the
United States in terms of market capitalization.
Bicycles and electric cars to get staff to
meetings, gaming centers, organic gardens, and
eco-friendly furnishings. Google wants to make
its employees' lives easier, and it's constantly
searching for ways to improve the health, well-
being, and morale of its Googlers.

19. External Performance of
Organisation
A company’s stability and profitability are interdependent on its ability to quickly
identify and respond to changes in the external environment. Change is inevitable
and having the flexibility to deal with unexpected market mutations can mean the
difference between survival and extinction for an organization. Something as
common as a shift in government policy could have a significant effect on a
business.
But the Corporate Social Responsibility (CSR) activities conducted by
organisations are considered to leave a mark and is considered as the most
critical success factor under external performance.

20. Example - Deloitte (Impact Day)
❖ Every year, thousands of volunteers from
Deloitte in India team up across different cities
and spend the entire working day.
❖ Impact Day provides an opportunity for
volunteers to put their passion, determination,
and skills to use for the benefit of communities.
❖ Deloitte in India makes an impact:
❖ More than 40,000 volunteers across 17 cities
in India
❖ 156 projects covering more than 930,000
beneficiaries
❖ Over 260,000 cumulative hours of
volunteering

21. Thank you!