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Levers of Corporate Governance in India: Critical Analysis through Prism of Legal Framework

Author

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  • Sapovadia, Vrajlal
  • Patel, Akash

Abstract

Corporate Governance is the relationship between corporate managers, directors and the capital providers, who save and invest their capital to earn money in form of dividend, interest or gain. Shareholders of the company appoint Board of Directors to fulfill their objectives aligned with the corporate objectives. Board of Directors appoints key managers for implementing corporate strategies. Corporate objectives are attained with the series of actions of the directors & managers. Capital & other necessary resources are provided by shareholders and other stakeholders to the company to fulfill the common objectives. It entails responsibility of corporate managers towards investors, society & environment that provides valuable resources to the corporation in achieving their objectives. Good corporate governance practices ensure that the board of directors is accountable for the pursuit of corporate objectives to enhance wealth of corporation and that the corporation itself conforms to the law and regulations in form & spirit. This paper identifies who are the levers of corporate governance and then investigates the powers of those levers, which influences the quality of corporate governance in corporate India. We critically analyze the effectiveness of Indian legal framework to ensure good corporate governance practices. The actors who can influence the quality of corporate governance are depicted in Chart-1 classified into (i) Internal: including shareholders, independent directors, audit & nomination committee and (ii) External: including auditors, Registrar of Companies, stock exchanges, Security Exchange Board of India and the Competition Commission of India.

Suggested Citation

  • Sapovadia, Vrajlal & Patel, Akash, 2013. "Levers of Corporate Governance in India: Critical Analysis through Prism of Legal Framework," MPRA Paper 55314, University Library of Munich, Germany, revised 19 Mar 2014.
  • Handle: RePEc:pra:mprapa:55314
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    File URL: https://mpra.ub.uni-muenchen.de/55314/1/MPRA_paper_55314.pdf
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    References listed on IDEAS

    as
    1. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance and Equity Prices," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 107-156.
    2. Sapovadia, Vrajlal, 2010. "Is blood thicker Than Water? Appraising Adequacy of Indian Corporate Governance Framework For Family Based Companies: A Case Study On Satyam Computers," MPRA Paper 55228, University Library of Munich, Germany.
    3. Haider A. Khan, 2003. "Corporate Governance of Family-Based Businesses in Asia: Which Road to Take?," CIRJE F-Series CIRJE-F-229, CIRJE, Faculty of Economics, University of Tokyo.
    4. Sapovadia, Vrajlal, 2003. "Critical Analysis of Accounting Standards vis-à-vis Corporate Governance Practice in India," MPRA Paper 55384, University Library of Munich, Germany, revised 10 Apr 2014.
    5. S. Narayan, 2009. "India," Chapters,in: The Political Economy of Trade Reform in Emerging Markets, chapter 7 Edward Elgar Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Sapovadia, Vrajlal, 2012. "Corporate Governance Issues in Indian Family-Based Businesses," MPRA Paper 55226, University Library of Munich, Germany.
    2. Sapovadia, Vrajlal, 2003. "Critical Analysis of Accounting Standards vis-à-vis Corporate Governance Practice in India," MPRA Paper 55384, University Library of Munich, Germany, revised 10 Apr 2014.
    3. Sapovadia, Vrajlal, 2010. "Is blood thicker Than Water? Appraising Adequacy of Indian Corporate Governance Framework For Family Based Companies: A Case Study On Satyam Computers," MPRA Paper 55228, University Library of Munich, Germany.

    More about this item

    Keywords

    Corporate Governance; Corporate Law; Company Law; SEBI; Primary Market; Secondary Market; Legal Compliance;

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K2 - Law and Economics - - Regulation and Business Law

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