Corporate Governance Norms In India: A Decade of Compliance or Non-Compliance?

Journal Name: 
Journal of Accounting and Finance
Volume: 
Vol. 31 - No. 1
Authors: 
Author Name Designation Organization
M. V. Shivaani
P. K. Jain
Surendra S. Yadav
Abstract: 

The paper attempts to study the level of compliance with select corporate governance provisions in Indian context. For the purpose, the study covers some pertinent provisions such as size of board, board diversity in terms of gender, proportion of executive directors,  proportion of independent directors, Chief risk officer (CRO), risk management committee, mandatory committees, voluntary committees and existence/non-existence of whistle blower policy, risk and concerns section and opportunities and threats section in annual reports. The sample consists of S&P CNX500 corporates and covers a 10 year period from 2005-2015. Recognising the importance of period under study, a phase-wise analysis (prerecession: 2005-2008; post-recession:2009-2015) has also been attempted. Further to gain an in-depth understanding of pattern of compliance and violations an age-wise analysis has been attempted, where companies have been categorised based on their age. The findings indicate that none of the companies have defaulted on complying with provisions related to Board size whereas, a substantial proportion of companies have been found to have violated on all other provisions (under study). It is noteworthy that over 90% companies failed to have a risk management committee or chief risk officer. The findings indicate appropriate will on part of companies to commit to good governance and to lack of stringent penalties that perpetuates such violations. The results of study are expected to be of immense utility to regulators in order to ensure compliance with relevant provisions.