Column : In the right zone

Ajay Shah
Posted: Tuesday, Jan 13, 2009 at 2341 hrs IST
Updated: Tuesday, Jan 13, 2009 at 2341 hrs IST

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: macroeconomics...

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» Corporate Governance

Posted by Vivek Bhargava on 2009-01-26 14:23:03.693039+05:30
Corporate Governance is governed more by management INTENT than regulation. A lower percentage of ownership guarantees nothing unless one understands the quality of institutional holding. High shareholding of domestic institutions has rarely ensured better corporate governance. Holdings by FIIs and MFs cannot guarantee better corporate governance because they are not permanent investors in the companies that they invest in. The subtle messages that one gets from the corporate governance and other corporate / financial behaviour of a company, relative to its peers is what one has to use to understand management intent. Regulation only defines the ZONE within which promoter managements can play around to take advantage of the situation. The major problem is with the implementation. Even now most a lot of people believe that nothing much will happen to the promoters of Satyman. That is the faith / confidence people have in the implementation of our laws!! There can be no corporate governance when there is no fear. For investors, management INTENT is the only guiding principle. Not difficult to figure out if you really want to SEE!!

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