Corporate governance structures in transition economies-issues and concerns for India

Abstract

Corporate Governance (CG) has become an important concern for transition economies like India worldwide economies with increasing dynamism of socio-economic environment. Sound system of governance is essential to the economic development of any nation that essentially requires a well-defined legislation, adoption of ethical standards and efficient market structures. Compared to developed economies, CG system in transition economies including BRICS nations is still an unbalanced one and evolving. The objective of this paper is to examine the present status of CG structure in India on certain selected CG parameters, legal and regulatory framework, and compare with the CG structures in other transition economies (BRICS). We use the sample of top 100 companies listed on National Stock Exchange to evaluate them on selected parameters. We examine the Indian corporate sector for transparency, compliances and ethics using reports of national and international agencies. We find that CG structure is weak, unreliable with concentration of controls and instances of growing corporate frauds with poor monitoring system fuelled by a variety of regulators. We suggest that an effective CG code must be developed to overcome these issues in the best interest of society and economy.