Governance
is not just a pious platitude. It is the accumulated outcome of inspiration, influence,
wisdom, guidance and control, which keeps a body or an organization not only moving
but also moving on the right track and at the right speed. It is inherent in the
very nature of cosmic as well as human systems. However, corporate governance
is essentially a state of mind and a set of principles based on relationships.
It can work only if the people entrusted with these responsibilities believe in
and are committed to the principles that underline effective corporate governance,
which in ultimate analysis, is a way of life and not a mere compliance with a
set of rules. Ideals of corporate governance primarily need transparency, full
disclosure, fairness to all stakeholders and effective monitoring of the state
of corporate affairs. It is, thus, concerned with values, vision, and visibility.
Sound corporate governance practices lead to greater management accountability,
credibility, enhanced public confidence, reduced share volatility, increased share
value and price earning ratio.
Corporate
governance is a conscious and sustained effort on the part of a corporate entity
to strike a judicious balance between its own interest and that of its stakeholders.
The `father' of corporate governance, Sir Adrian Cadbury, defines corporate governance
as the system by which companies are directed and controlled. It is the relationship
among various participants in determining the direction and performance of corporations.
It is not merely enacting legislation; but instilling an environment of trust
and confidence as ethical business behavior and fairness cannot be legislated.
It aims at minimizing the chances of corruption, malpractices, financial frauds,
and misconduct of management. It provides various codes and regulations to establish
effective governance system and to monitor the performance of corporations in
the context of transparency, advocacy, accountability and social contribution
to the society. |
