A Conceptual Framework for Corporate Governance

Abstract

The business environment in which companies operate in the current times is undergoing tremendous changes. These are both, the driving force as well as the result of scientific and technological developments affecting the business environment and the society as a whole. Developing an efficient, high-quality system of corporate governance is critical if companies are to seize the plethora of opportunities provided by the sweeping changes and seek to control the accompanying threats. Given this context, over the past few years, a number ofregulations and recommendations have been drawn up - both at the global level as well as in many individual countries on the required levels of corporate governance. Further, in the United States, Europe and in oriental countries like in India, recent corporate collapses have shown the serious damage that poor or non-existent governance can cause both for individual companies and for the system as a whole. Satyam Computers is a case in point. Although these can be tenned as exceptions rather than the rule, such situations have given rise to a whole array of initiatives to draw up new legislation and regulations, and to produce fresh recommendations for companies to follow.