Ever since the corporate firm with limited liability emerged, the problems of corporate governance made their way into the corporations. This paper tries to briefly peep into the emergence of corporate governance, and the arguments associated with it. It is understood that until the seminal publication of Berle and Means' (1932), corporate governance gained impetus in academic research. However, the research that followed, was generally based on the assumption of separation of ownership and control, in other words, widely-dispersed firms. Contrary to the assumption of widely-dispersed firms, earlier studies have shown that these firms are a rare phenomenon, even in the most advanced nations. Corporate governance, as a concept, is slowly seeping into the Indian business psychewhatever may be the compulsions of acceptance. The pace at which corporate governance practices are being adopted by the industry, does however, cast a doubt on the intentions of both the regulators and the industry. Since the Indian industry is conventionally not strongly market-oriented, the practical difficulties of adopting transparent mechanisms which would remove the veil of accounting practices that firms have so far adopted, has led to the slow acceptance of the corporate governance practices.

Ever since the corporate form with limited liability emerged, the problems of corporate governance made their way into corporations. Though it is difficult to trace back to when this word was coined, there is a convergence in the views of academics and researchers that, before 1932, corporate governance was not viewed seriously. The theory of separation of ownership and control propounded by Adolph A Berle and Gardiner C Means laid the foundation for generations of research in understanding the nuances of corporate governance. Though most of the early literature concentrated on the expropriation of the shareholders' wealth by the managers, today, corporate governance research has come of age and its scope has broadened.

Corporate governance is viewed as a composite whole, that draws together elements that simultaneously help in determining the qualitative and quantitative aspects of business (Julie Margret, 2001). A more focused view of corporate governance issues can be established by questioning who is benefited, and who should be benefited from corporate decisions or senior management actions (Cochran and Wartick, 1988). A corporate governance issue exists when there is a conflict between `what is' and `what ought to be.'

Conflicts arise whenever there are differences in perspectives amongst the actors involved. And wherever there are conflicts, problems of governance exist. The primary reasons for conflicts in interests amongst the actors in a firm are their differing objectives. Though many theories of firms have been propounded over the past few decades, it is seen that not many authors have focused on the behavioral aspects of a firm. The `Theory of Markets' passed off as the `Theory of Firms'. Economic theories have taken a long time to explain the rationale for existence; and more so, have severely failed to explain the boundaries and internal organization of the firms. All that the economists proffered as the `Theory of Firms', was subsumed in the basic argument of `price theory.'

Management Research Journal, Corporate Governance, Economic Theories, Corporate Decisions, Theory of Markets, Indian Industry, Indian Markets, Mutual Funds, Capital Markets, Private Sector Enterprises, Financial Liberalization, Securities and Exchange Board of India, SEBI.