The Mint has a report today stating that “only 5-6% of publicly traded companies in India have taken D&O insurance policies, compared with nearly 95% of Fortune 500 companies”. This seems striking considering the fear that various corporate governance episodes in India have generated among directors and managements. One of the key reasons for lack of D&O insurance policies is generally...
Corporate Governance: Transactions with Controlling Shareholders
Two recent events around the world bear eerie resemblances with India’s own corporate governance scandal that came to light in Satyam Computers nearly three years ago. Readers may recall that the Satyam episode was triggered by the company’s proposed acquisition of two related entities, Maytas Properties and Maytas Infra, which was approved by the board of Satyam, but vehemently rejected by its...
Papers on Corporate Governance in India
The following recent papers contribute to the empirical literature on corporate governance in India, and deal with issues that have hitherto received less attention. 1. Executive Compensation in India by Rajesh Chakrabarti, Krishnamurthy Subramanian, Pradeep K. Yadav & Yesha Yadav. The abstract is as follows: We present an introductory regulatory and empirical analysis of executive...
Corporate Governance in Emerging Markets
A recent study by Melsa Ararat and George Dallas under the aegis of the International Finance Corporation (IFC) highlights some of the special issues affecting corporate governance in emerging markets. In their paper Corporate Governance in Emerging Markets: Why It Matters to Investors—and What They Can Do About It, the authors comment on the scholarly research in corporate governance in emerging...
Corporate Philanthropy: Strategies & Incentives
The Harvard Corporate Governance Forum has an interesting and detailed post on corporate philanthropy that examines the various incentives that operate in this space. The post first seeks to identify the concept of corporate philanthropy: This report focuses on corporate philanthropy, which includes direct cash giving, foundation grants, stock donations, employee time, product donations, and...
Miscellaneous
1. Put Options & Foreign Exchange Regulations We have in the past discussed the questions regarding the enforceability of put and call options under securities laws and regulations, primarily the Securities Contracts (Regulation) Act, 1956. In addition, if put options are entered into by foreign investors, the Foreign Exchange Management Act, 1999 and regulations issued by the Reserve Bank of...
Recent Literature on Corporate Governance
Professor Donald Clarke has posted a paper titled ‘Nothing But Wind’? The Past and Future of Comparative Corporate Governance where he examines the trends in comparative corporate governance scholarship and analyzes the direction it is likely to take in the near future. The abstract is as follows: Corporate law scholarship has come a long way since Bayless Manning some four decades ago famously...
Gender Diversity on Corporate Boards
We have been examining the “mandatory vs. voluntary” debate with respect to corporate social responsibility (CSR). A similar debate has arisen with participation of women on corporate boards. Some countries (particularly in Europe) are adopting mandatory quota requirements. Others are adopting a voluntary approach, for example in the UK where executive search firms have published a voluntary code...
Academic Analysis of CSR in India
Although there has been a signficiant amount of discussion about corporate social responsibility (CSR) in India, there has been little academic analysis of the concept. A new paper titled Directors as Trustees of the Nation? India’s Corporate Governance and Corporate Social Responsibility Reform Efforts by Professor Afra Afsharipour fills this gap. Interestingly, it also considers the crucial...
An Instance of Accounting Fraud
The New York Times analyzes an instance of possible accounting fraud at a Chinese company, Longtop Financial Technologies that has close similarities with India’s own Satyam scandal (i.e. improper confirmation of bank balances). While the Satyam scandal came into the public domain through a confession letter of the Chairman, in this case the auditor blew the whistle. Here is an extract: Deloitte...
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