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...
Caution in Whistle Blowing
Whistle blowing is one of the key tools used in corporate governance to act as a check on managerial actions. It is also recognised in India as a non-mandatory requirement under Clause 49 of the listing agreement. While whistle blowing is useful in enhancing governance standards, the recent episode at Renault suggests that it is also capable of abuse. Lessons from that episode include the need...
Nomination Committees of Corporate Boards
The recent episode relating to the nomination of directors for appointment on the board of Hewlett-Packard Co. brings to the fore the role of the nomination committee. Institutional Shareholder Services (ISS), a shareholder advisory group, recommended a vote against certain nominees on the ground that HP’s nomination committee was heavily influenced by the HP CEO, Leo Apotheker. While HP’s...
Actions Against Independent Directors
On March 11, 2011, SEBI passed an order in relation to Pyramid Saimara Theatre Limited (PSTL) restraining three of its independent directors (Mr. K.S. Kasiraman, Mr. K. Natarahjan and Mr. G. Ramakrishnan) from being independent directors or members of audit committees of any listed company for a period of two years from March 11, 2011. The order was passed on the ground that these independent...
Scams and Corporate Governance
The various scams afflicting India over the last few months were largely perceived as matters within the realm of public governance involving the Government, ministers and officials. Lately, however, the spotlight seems to be shifting to the private sector and to companies that are alleged to be beneficiaries of public mismanagement of resources. Questions are being asked about the acts and...
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