Corporate governance is an institutional arrangement that not only addresses the agency problem between shareholders and managers of the firm, but also provides the context for the decisions taken by the top management of the firm. In this context, the first paper, “The Relationship Between Ownership Types and Corporate Governance and Disclosure Practices of Firms Listed on Indian Stock Exchange” by Pankaj M Madhani, empirically investigates whether ownership types influence the corporate governance and disclosure practices of firms. This research focuses on firms across various sectors listed on Bombay Stock Exchange (BSE) and segregated according to types of ownership, i.e., foreign firms, private sector firms and public sector firms. Such firms are diverse entities with different management philosophy, responsibility and structure; hence, this research seeks to identify whether corporate governance and disclosure practices of firms with various ownership types are significantly different. It also describes and compares the salient features of different ownership types. The findings shed light on the governance and disclosure practices of firms segregated according to ownership types in the legal and institutional environment of India. The paper concludes that there is no statistically significant difference in the corporate governance and disclosure practices of firms across various ownership types and identifies the reasons for it.

An effective board is perceived as a prerequisite for sound corporate governance practices based on the view that the board guides long-term corporate strategy, puts the key agents in place to implement it, and monitors the performance against the strategy set out. In short, effective boards are likely to positively influence firm performance. Extending this research further, the second paper, “The Nature of Corporate Board Structure and Its Impact on the Performance of USA Listed Firms”, by Shweta Mehrotra, attempts to examine board structure and its relationship as well as impact on the financial performance of firms listed in USA stock exchange. The sample data covers 100 firms listed on New York Stock Exchange (NYSE) representing equal mix of large cap and mid-cap firms. The time period of the study is five financial years, i.e., from 2008-09 to 2012-13. The findings reveal that high frequency of meetings adversely affects the firm performance, whereas combined board leadership structure positively contributes to firm performance. Also, financial performance is independent of board size and composition. In order to get a holistic performance view of firms, future research should focus on nonfinancial aspects of performance such as customer satisfaction, employee satisfaction and investor confidence.

Ethics refers to moral demands regarding the business and is based on a theory of the relationship between business and society. It is recognized that ethics is a good business investment that generates long-term business performance and enhances the trust and confidence of stakeholders. The last paper, “An Empirical Study of the Extent of Ethical Business Practices in Selected Industries in India”, by Puneeta Goel and R S Ramesh, focuses on this topic in the Indian context. The sample comprises 120 companies selected from the list of ET 500, representing eight industries for the financial year 2012-13. The top 15 companies based on revenue from eight industries, viz., iron and steel, IT and computers, engineering and electrical, auto and ancillaries, pharmaceuticals, chemicals and fertilizers, oil refineries, and power, diversified and consumer appliances have been considered for the study. Ethical actions by firms refer to processes, activities and events conducted on ethical basis and go beyond the firm’s daily functions. The ethical identity of firms is represented by indicators such as corporate governance, Corporate Social Responsibility (CSR) along with sustainability and triple bottom line. To determine the extent of ethical practices followed by the companies, a set of 20 parameters based on corporate governance, CSR and sustainability has been used. The findings of this study emphasize that most of the companies in India have initiated ethical practices and started following mandatory and non-mandatory norms of corporate governance, CSR and sustainability. However, the paper concludes that there is a significant difference between the different industries in following and reporting ethical practices in India.

--Pankaj M Madhani
Consulting Editor