Examining the Dynamics of Whistleblowing: A Causal Approach

--Shivaji Banerjee and Shaunak Roy

Whistleblowing has become a buzzword in the encyclopedia of corporate governance jargons and myriad regulatory enforcement programs. A whistleblower is an employee or official who blows the whistle on corruption, felony or other wrongdoing, especially on ethico-moral grounds. It is a turbulent situation across the globe where a majority of the enterprises are exposed to deteriorating governance both in the public and corporate realm. With rampant corruption and unethical ventures being practiced, the upright whistleblowers find it extremely arduous to survive. For them, it is like living on landmines which can explode any minute! The million-dollar question is not whether adequate safeguards are being taken with regard to whistleblowers, it is about the avenue that triggers repercussions, which may be favorable or retaliatory. The present paper seeks to unravel the situational and individual antecedents that pave the path for whistleblowing, while touching on the risks that such upright individuals are exposed to. The paper further seeks to rediscover the behavioral dynamics of whistleblowers by examining what motivates them: the desire to be labeled as public heroes or as saints in the corporate milieu. The authors have, throughout this endeavor, sought to throw light on the ethico-moral aspect of human behavior, as this is the root cause of all hassles, with aid of a couple of case studies on morally upright whistleblowers in the Indian scenario.

© 2014 IUP. All Rights Reserved.

Corporate Governance and Disclosure Practices of Indian Firms: An Industry Perspective

--Pankaj M Madhani

Corporate governance stands for responsible business management geared towards long-term value creation. Good corporate governance is a key driver of sustainable corporate growth and long-term competitive advantage. It focuses on a company’s structure and processes to ensure fair, responsible, transparent and accountable corporate behavior. This study attempts to examine the impact of the nature of sector or industry on corporate governance and disclosure practices of firms by identifying and testing the empirical evidence for such relationship for firms listed on the Bombay Stock Exchange (BSE) in the form of S&P BSE sector indices. The sample firms represent different sectors, like auto, metal, oil and gas, consumer durables, capital goods, FMCG, healthcare, IT, and power. The findings reveal that no significant correlation exists between the industry type and the level of disclosure in the Indian context.

© 2014 IUP. All Rights Reserved.

Institutional Investments in India: A Review of the Literature

--Amiya K Sahu, L K Vaswani and Amrita Chakraborty

This paper reviews the relevant literature on institutional investment and firm performance in India. It discusses the development of institutional investments in general under different segments like ownership and firm performance, role of large shareholders, and institutions as large shareholders in influencing corporate governance, reducing agency costs and affecting firm performance. It then discusses the monitoring role of institutional investors and the cost and benefits of monitoring. It also describes institutional investment in India and segments it into different groups of institutions and summarizes the extant studies in each category, i.e., mutual funds, banks and financial institutions, and foreign financial institutions. The paper shows that studies have reported divergent results in the context of developed economies. Although the history of institutional investment in India is short and the number of research in the Indian context is limited, they report evidence of monitoring. While the influence of mutual funds and banks is not clear, recent studies have argued that foreign institutional investors’ shareholding has a positive influence on firm performance.

© 2014 IUP. All Rights Reserved.

Board Size and Board Independence: A Quantitative Study on Banking Industry in Pakistan

--Aqil Waqar, Kashif Rashid and Aamna Jadoon

There is a lack of consensus regarding the impact of corporate governance practices in correspondence to the number of board members and board independence in banking sector. This paper aims to investigate the relationship of board independence and board size with productivity and efficiency of 23 banks listed on the Karachi Stock Exchange, Pakistan, by analyzing the data obtained from the annual reports of the selected banks for the period 2006-2010. Ordinary Least Square (OLS) regression analysis and Generalized Method of Moment (GMM) are used to examine the relationship between board independence and profitability, taking care of endogeneity and data scattering factor. Two control variables—the size of a firm and funds available for lending—are also considered. The results show that there is a positive relationship between board independence and bank profitability and efficiency. Independent directors play a crucial role in providing genuine advice during executive decision-making process which is an important source for improving overall corporate governance. Moreover, results regarding the role of control variables suggest a positive relationship between total assets and deposits of the firm and firm’s performance, supporting the stewardship theory.

© 2014 IUP. All Rights Reserved.