“During the last decade, there has been a sustained effort on the part of the Indian regulators to strengthen corporate governance norms. This been strongly influenced by developments that occurred in other parts of the world, particularly the US and UK. This study reflects upon whether the approach adopted by the Indian regulators is adequate or whether that requires some mid-course correction. With that in mind, this Article adopts a revisionist approach with the help of two simple assertions, develops those further and leaves some food for thought leading to possible further detailed normative research.
The twin assertions are: (i) the broad features of the Indian corporate governance norms have been transplanted from other jurisdictions such as US and UK that follow the ‘outsider’ model of corporate governance, and hence those norms are not likely to be suitable for implementation in addressing governance problems in India, which follows the ‘insider’ model; and (ii) recent events involving the collapse of several leading companies provide evidence, at least anecdotal in nature, that the corporate governance norms followed in the US and UK have not been effective in preventing large-scale corporate governance failures, thereby raising questions about the efficacy of that model in the Indian context.
Through these assertions, this Article makes the case that the source for strengthening Indian corporate governance lies within. Seeking out other systems of corporate governance to emulate will only lead to further incongruity with the traditional business systems and practices that are replete in India, and unnecessarily add to the eclecticism that persists in Indian corporate governance. What is required is a model of governance that resonates well with Indian business values and practices from the standpoint of economic, social, and political factors.”
Saturday, January 24, 2009
Paper on Corporate Governance
I have posted on SSRN a paper titled “A Cautionary Tale of the Transplant Effect on Indian Corporate Governance”, the abstract of which is as follows: