process of corporate_governance

May 29th, 2015
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Definition: Corporate Governance deals with laws, procedures, practices and implicit rules that determine a company’s ability to take managerial decisions viz. a viz. its claimants- in particular its shareholders, its creditors, its customers, the State and employees. There is a global consensus about the objective of “good Corporate Governance: maximizing long term shareholder value(return on shareholder investment). Since shareholders are residual claimants(they get their return after every shareholder group gets their respective claims), this objective follows from a premise, that in well performing capital and financial markets, whatever maximizes shareholder value must necessarily maximize corporate prosperity and best satisfy the claims of creditors, employees, customers, vendors, associates, regulatory agencies including the government, and the larger societal environment in which the firm operates.

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CORPORATE GOVERNANCEDefinition: Corporate Governance deals with laws, procedures, practices and implicit rules that determine a companys ability to take managerial decisions viz. a viz. its claimants- in particular its shareholders, its creditors, its customers, the State and employees. There is a global consensus about the objective of good Corporate Governance: maximizing long term shareholder value(return on shareholder investment). Since shareholders are residual claimants(they get their return after every shareholder group gets their respective claims), this objective follows from a premise, that in well performing capital and financial markets, whatever maximizes shareholder value must necessarily maximize corporate prosperity and best satisfy the claims of creditors, employees, customers, vendors, associates, regulatory agencies including the government, and the larger societal environment in which the firm operates. However the major priority is still given to shareholders and creditors by most institutions in most countries that are responsible for developing guidelines on this relatively recent area of business focus. In India the prevailing guidelines have emerged from the recommendations of Confederation of Indian Industries(C.I.I. code 1998), and the Securities and Exchange Bureau of India(SEBI code 1999) which have been formally incorporated in clause 49 of the official SEBI rules which deals with compliance requirements of both listed com

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