There is a large variation in the quality of corporate governance practices adopted by firms even when they are subject to the same contractual environment. Therefore, it is possible that firms within the same country have widely divergent standards of overall corporate governance. This leads to the fact that different Indian firms could have varying standards of corporate governance disclosure. The present study aims to provide an understanding of corporate governance disclosure levels of Indian companies in the private and public sector. It provides useful insights into comparing and contrasting corporate governance practices of public and private sector companies in India by developing a Corporate Governance Disclosure Score (CGDS). Research in the field of corporate governance disclosure during recent years has mainly focused on the disclosure practices in the annual reports of firms. In conducting this research also, annual reports for the year 2008-2009 of 77 listed Indian companies have been used as a main source of information. While 48 of these companies belong to the private sector, 29 belong to the public sector. The sample is drawn from across eight industries. The study uses the univariate parametric t-test and non-parametric Mann Whitney test for comparing means, and the results indicate that there is a significant difference between the CGDSs of public and private sector companies in India.

What gets measured gets managed. Adequate disclosures thus ensure good governance. Corporate governance issues not only impact the corporate sector, but are a necessary condition for the long-term sustainability of the development of an economy. The role of corporate governance mechanisms in economic growth remained virtually invisible until the East Asian financial crisis (1997-1998). The global financial crisis of 2008, which witnessed the collapse of many financial institutions, corporations and global economies, brought with it a substantive challenge to policy makers and called for development and enforcement of effective corporate governance mechanisms. Emerging markets like India which can ill afford the consequences of a weak system of corporate governance thus began a process of serious rethinking on the extant corporate governance mechanisms. There emerged a clear recognition of the role of government and regulators to deliver an effective legal system for market regulations.

The discipline of corporate governance has attracted worldwide attention following the financial scams such as Enron, WorldCom and Tyco. Financial bungling in the case of IT giant Satyam in India has shaken the system out of its complacency and corporate governance has become the center stage for reforms. Internationally, Cadbury, Greenbury and Hampel committees were instituted in the 1990s to look into the issue of corporate governance and provide remedial solutions thereof. The Sarbanes-Oxley Act, instituted in 2002, played a pivotal role in laying the foundation of corporate governance across the globe. Clause 49 of the listing agreement which has been modelled on the basis of the Sarbanes-Oxley Act has been in effect in India since 2006. The clause lays down corporate governance guidelines for listed Indian companies.

Out of the several critical elements of corporate governance system, the present study focuses only on the role of disclosure. Financial disclosure is an important component of corporate governance since it allows all stakeholders to monitor firm performance. It is the quality of financial reports that determines the quality of corporate governance. According to Bushman and Smith (2001), financial disclosure plays a dual role, firstly by allowing investors and other outside parties to monitor firm performance through information presented in the financial statements. Secondly, an efficient disclosure system brings clarity to the boards regarding the strategy and risk appetite of the company.

The Indian corporate sector has a preponderance of family-owned businesses which are oligopolistic in nature. India is also plagued by challenges of poor infrastructure, weak legal controls and political interference. This setting renders a unique dimension to the corporate governance problem in our country. It was in the post-liberalization era that the thrust on corporate governance issues increased. Globalization brought with it the need for companies to become more competitive, making stock market an attractive source of finance, thus raising the requirement of financial disclosures by companies. While many earlier studies have examined financial disclosure practices in the case of India, a number of research questions still remain. The present research paper examines the role of ownership/management control in the level of corporate governance disclosures of select listed public and private Indian enterprises by developing a Corporate Governance Disclosure Score (CGDS). This score is based on 88 attributes which have been drawn from the Standard and Poor’s (S&P) Transparency and Disclosure Survey.

Corporate Governance Journal, Corporate Governance Reforms, Financial Disclosures, Indian Companies, Financial Sector Reforms, Globalization, Information Asymmetries, Indian Corporate Morality, Market Mechanism, International Financial Reporting Standards, IFRS, Indian Accounting Standards, Economic Development, Financial Accounting Systems, Corporate Control Mechanisms.