dcsimg

Satyam Crisis Sharpens Focus on Governance

SHARE
Share it on Twitter  
Share it on Facebook  
Share it on Linked in  
Email  

The Satyam debacle has drawn the importance of corporate governance into sharper focus in India, according to this Livemint.com piece. Observers are asking whether corporate boards need to include more independent directors who are rigorously screened for experience and training. Should those directors then report more often to external investors? What about separating the CEO and chairman roles?

 

Writer Colin Mayer says many companies, in India and elsewhere, have taken these approaches. Unfortunately, they haven't prevented everything. The Madoff scandal happened after Sarbanes-Oxley was supposed to have plugged perceived loopholes. Independent directors don't help much when a dominant CEO expects support and cooperation from his or her non-executive board members.

 

Good governance is about more than how the board is composed, Mayer says. Governance requires more direct involvement from investors. He suggests that shareholder activism may be a viable alternative to tweaking a board's makeup.

NewsletterITBUSINESSEDGE DAILY NEWSLETTER

SUBSCRIBE TO OUR DAILY EDGE NEWSLETTERS