In two previous posts (here and here), we discussed the several corporate governance issues that have been accentuated on account of the current financial turmoil emanating from the U.S. In this post, we examine some of the differences between corporate structures and governance in the U.S. and India. In India, companies predominantly display concentrated shareholding structures (as opposed to...
History Repeats Itself: Whither Governance? (Part 2)
In the background of the boardroom failures discussed in the previous post, it is useful to explore some of the factors involving U.S. corporate governance that may have led to this situation. 1. Dispersed Shareholding and Lack of Oversight One of the key problems involving a dispersed shareholding model (that is prevalent largely in the U.S. and U.K.) is that the individual shareholders have...
History Repeats Itself: Whither Governance?
Much has already been stated in the press about the current financial crisis that has rocked not only the U.S. economy, but also the global financial system, and indeed the magnitude of this crisis will ensure that a lot more will be said in the future. Here we focus on one aspect of the crisis, which is the perceptible failure of corporate governance involving large companies. In a provocatively...
The Feasibility of a Toxic Relief Fund
The new proposal to deal with the financial crisis involves the U.S. Government setting up a special fund to acquire toxic or illiquid financial assets on bank balance sheets. The Times Online has a report: “Henry Paulson, the US Treasury Secretary, hopes to nationalise the global risks associated with America’s sub-prime mortgages by setting up a toxic relief fund to buy up the mortgage assets...
Corporate Governance in Banks
With the recent credit crisis weakening the financial position of several banks world-over, the question that is being repeatedly posed is whether the boards of directors of these banks could have foreseen the oncoming crisis or whether they should have taken steps to forestall a slide in their financial position. Fingers are being pointed not only at the executive management of these banks, but...
CSX/TCI Judgment – Some Thoughts on the SEBI Takeover Regulations
In a closely followed case, the U.S. District Court for the Southern District of New York issued its decision regarding the reporting requirements of a hedge fund (TCI) that had entered into “total return equity swaps” with counterparties in respect of the shares of CSX. Although TCI only entered into cash-settled swaps (without any obligations to obtain delivery of CSX’s shares), the...
Some Lessons from Bear Stearns
The New York Times DealProfessor has a column Burying Bear Stearns that highlights the takeaways from the Bear Stearns saga, which incidentally are matters we often endeavour to stress on this blog. They are:
– Moral hazard– Systemic risk– Corporate governance
Training Directors
I had earlier posted about the Chartered Director test prescribed by the Institute of Directors in London, which is a qualifying examination for directors on corporate boards. In response, one our readers from Australia, Susie Reece Jones, has been kind enough to provide us with some details about the situation in Australia in this regard. In Australia, there is almost a de facto pre-requisite...
An Examination for Directors
A few weeks ago, we carried a post by Pramod Rao discussing the implications of recent changes to Clause 49 of the listing agreement, the key ones being strengthening the role of the independent directors on boards of Indian listed companies. Although relegated only to a non-mandatory provision, one of the changes states that a “company may ensure that the person who is being appointed as an...
Micro..hoo: A New Twist
This new development on the international M&A front is worth briefly noting on this blog. We had all expected to see a highly-contested battle for control of Yahoo! panning out over the next few months. A hostile bid by Microsoft was keenly on the cards. But, it all ended last weekend turning out to be a damp squib, with CEO Steve Ballmer announcing Microsoft intention of withdrawing from the...
Recent Comments