Corporate Governance

Abstract

The concept of Corporate Governance took roots in countries like US and UK and have subsequently spread to other countries. After 1990, the transition from central planning to market driven economies, particularly the privatization of state-owned companies, and the need to provide governance rules for the emerging private sector, brought the issue of corporate governance to the centre stage. As a fall out of 1997 economic and financial crisis, Asian countries too became keenly interested in the issue of corporate governance. The OECD took early initiatives to address governance issues. The term 'Corporate Governance' has also become a focal point not only in India but worldwide. Its prominence has surged notably, particularly since the latter part of 1996. This escalation can be attributed to two principal factors: the economic liberalization and deregulation of industry and business, and the growing call for a renewed corporate ethos with stringent adherence to diverse laws, coupled with heightened accountability of companies to their shareholders and customers. It is observed that Corporate Governance encompasses a wide range of principles and practices aimed at ensuring that a company operates in a fair, transparent, and accountable manner. It involves the processes and structures used to direct and manage the business and affairs of the company, with a focus on balancing the interests of various stakeholders, including shareholders, management, customers, suppliers, financiers, government, and the community. In the current era of globalization and liberalization, the corporate sector, both at the national and international levels, is compelled to earnestly and consistently pursue 'Excellence in Corporate Governance' to its fullest extent. This article endeavors to illustrate the evolution of the 'Corporate Governance' concept over time, examining its trajectory at both national and international levels, and speculating on the future direction it might take.