chapter016-fn
by A. C. Fernando
Corporate Governance: Principles, Policies and Practices, 2nd Edition
- Cover
- Title Page
- Contents
- About the Author
- Dedication
- Foreword
- Abbreviations
- Preface to the Second Edition
- Preface
- Part One - Understanding Corporate Governance
- 1. Corporate Governance: An Overview
- Capitalism at Crossroads
- Increasing Awareness
- Global Concerns
- What is Corporate Governance?
- Governance Is More Than Just Board Processes and Procedures
- A Historical Perspective of Corporate Governance
- Issues in Corporate Governance
- Conclusion
- Keywords
- Disscussion Questions
- Suggested Readings
- Case Study Infosys Technologies: The Best Among Indian Corporates
- 2. The Theory and Practice of Corporate Governance
- The Concept of Corporation
- Theoretical Basis of Corporate Governance
- Corporate Governance Mechanisms
- Corporate Governance Systems
- Indian Model of Governance
- What is “Good” Corporate Governance?
- Obligation to Society at Large
- Obligation to Investors
- Obligation to Employees
- Obligation to Customers
- Managerial Obligation
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Case Study Tata Steel: A Company That Also Makes Steel
- 3. Landmarks in the Emergence of Corporate Governance
- Introduction
- Corporate Governance Committees
- World Bank on Corporate Governance
- OECD Principles
- McKinsey Survey on Corporate Governance
- Sarbanes–Oxley Act, 2002
- Indian Committees and Guidelines
- Working Group on the Companies Act, 1996
- The Confederation of Indian Industry’s Initiative
- SEBI’s Initiatives
- Naresh Chandra Committee Report, 2002
- Narayana Murthy Committee Report, 2003
- Dr. J. J. Irani Committee Report on Company Law, 2005
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Case Study ITC Limited: Is Corporate Governance Only Skin Deep?
- 1. Corporate Governance: An Overview
- Part Two - Agents and Institutions in Corporate Governance
- 4. Rights and Privileges of Shareholders
- 5. Investors’ Problems and Protection
- 6. Corporate Governance and Other Stakeholders
- Introduction
- Corporate Governance and Employees
- Corporate Governance and Customers
- Corporate Governance and Institutional Investors
- Corporate Governance and Creditors
- Corporate Governance and the Community
- Corporate Governance and the Government
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Case Study The Tylenol Crisis: How Ethical Practices Saved Johnson & Johnson from Collapse
- 7. Board of Directors: A Powerful Instrument in Corporate Governance
- Introduction
- Role of the Board in Ensuring Corporate Governance
- Governance Issues Relating to the Board
- The Role of Directors
- Independent Directors
- Directors’ Remuneration
- Family-owned Businesses and Corporate Governance
- Some Pioneering Indian Boards
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Case Study How Unethical Practices Almost Destroyed WorldCom
- 8. Role, Duties and Responsibilities of Auditors
- Introduction
- Types of Auditors
- The American Law Governing Auditors’ Responsibilities
- Indian Situation
- Naresh Chandra Committee
- Companies (Amendment) Bill, 2003
- Companies (Auditors Report) Order (CARO), 2003
- Corporate Governance and Internal Auditors
- Cost Audit Methodology
- Quality Audit
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Case Study The Rise and Fall of Arthur Andersen
- 9. Banks and Corporate Governance
- Banks and Corporates
- Why Corporate Governance in Banks?
- Corporate Governance and the World Bank
- Basel Committee on Corporate Governance
- Sound Corporate Governance Practices of Bank
- Corporate Governance in Indian Banks
- Review of Indian Experience in Corporate Governance
- Ganguly Committees’s Recommendations
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Case Study Global Trust Bank: The Bank That Went Bust
- Part Three - Facilitators, Role Players and Regulators
- 10. Business Ethics and Corporate Governance
- Introduction
- Importance and Need for Business Ethics
- The Indian Context
- Roots of Unethical Behaviour
- Some Unethical Issues
- Corporate Governance Ethics
- How Ethics Can Make Corporate Governance More Meaningful?
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Case Study The Enron Fiasco: Does End Justify the Means?
- 11. Corporate Social Responsibility
- Introduction
- Definitions of Corporate Social Responsibility (CSR)
- Justification of CSR
- The Scope of Social Responsibility
- Social Responsibility and Indian Corporations
- Conclusion
- Keywords
- Discussion Questions
- Case Study TVS Group of Companies: Commitment Far Beyond a Sense of Corporate Social Responsibility
- 12. Environmental Concerns and Corporations
- Introduction
- Industrial Pollution
- Evidence of Pollutants
- Natural Environment and Business
- Pollution Prevention
- Improving Corporate Environmental Performance
- The Need for a New Approach
- Environmental Management in India
- Corporate India Gets Eco-friendly
- India’s Environment Policy
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Case Study World’s Worst Man-made Disasters
- Case Study Bhopal Tragedy: Mother of all Industrial Disasters
- 13. The Role of the Media in Ensuring Corporate Governance
- 14. Monopoly, Competition and Corporate Governance
- 15. The Role of Public Policies in Governing Business
- Introduction
- Framing of Public Policy
- Involvement of Business in Public Policy Decision Making
- Public Policy and Business
- Economic Policy
- Monetary Policy
- Fiscal Policy
- Physical Controls
- Government Regulations in Business
- Public Policies and Government Regulations in India
- Workplace Safety and Health
- Functional Regulations
- MRTP Act, 1969
- Public Policies for the Global Village
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- 16. SEBI: The Indian Capital Market Regulator
- Introduction
- Phenomenal Growth of Indian Capital Market
- Role of Securities Market in Economic Growth
- The Securities and Exchange Board of India
- SEBI’s Role in Promoting Corporate Governance
- SEBI’s Record of Performance
- SEBI’s Role in the New Era
- SEBI’s Shortcomings
- Suggestions for SEBI’s Improvement
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Case Study Ketan Played Around with Others’ Money
- 17. The Role of the Government in Ensuring Corporate Governance
- 10. Business Ethics and Corporate Governance
- Part Four - Issues and Problems of Corporate Governance in Emerging Economies
- 18. Corporate Governance in Developing and Transition Economies
- Introduction
- Problems Faced by Developing and Transitional Economies
- Defining Corporate Governance
- Corporate Governance Models
- The Institutional Framework for Effective Corporate Governance
- Corporate Governance Challenges in Developing, Emerging and Transition Economies
- Current Corporate Governance Settings in Transition Economies
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Case Study Problems and Issues of Corporate Governance in Emerging Economies: Russian Example
- 19. Corporate Governance: The Indian Scenario
- Introduction
- The Emergence of Corporate Governance Issues in India
- Efforts to Initiate Corporate Governance in the Country
- Implementation of the Recommendations of Birla Committee Report
- Pioneers in Good Governance Practices
- Need For Accounting Standards
- Corporate Governance Rating
- Corporate Governance in India—A Performance Appraisal
- The Future of Corporate Governance in India
- Conclusion
- Keywords
- Discussion Questions
- Suggested Readings
- Reports
- Case Study Insider Trading: HLL–BBLIL Merger
- 20. The Corporation in a Global Society
- 18. Corporate Governance in Developing and Transition Economies
- Notes
- Bibliography
- Glossary
- Useful Web Sites on Corporate Governance and CSR
- Official Reports
- Prominent Guidelines on Corporate Governance
- Links on Corporate Governance
- Acknowledgements
- Copyright
Chapter 16
1. Insider trading implies trading in the scrip of a company by such a person who is closely associated with it and has access to unpublished price-sensitive information. Front running is indulged in by brokers. On being advised by institutions to execute bulk orders (buy or sell) that have the potential to push the market price (up or down), the brokers make deals in advance of institution orders and make profits for themselves.
2. Speech on “Corporate Governance and Development: Why it Matters?” by G. N.Bajpai, Chairman, SEBI.
3. Ibid. At the meeting of “Global Corporate Governance Forum” held on 4 November 2003 in Paris.
4. Bharat’s Manual of SEBI, Act, Rules, Regulations, Guidelines, Circulars, etc. September 2003.
5. This quote and the following analysis are based on an edited extract of the speech delivered by G. N. Bajpai, Chairman, SEBI, at 2003 Lex Mundi and Global Forum (Jointly organised by Lex Mundi and Global Corporate Governance Forum of the World Bank).
6. Better corporate governance for stock exchanges by C. R. L. Narasimhan in The Hindu, 15 March 2004.
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