This issue throws light on two diverse topics of current relevance—corporate governance and disclosure practices and Corporate Social Responsibility (CSR) activities of firms listed in Indian stock exchange.

Corporate governance and disclosure practices of firms are influenced by various internal as well as external corporate governance mechanisms. Likewise, with the new amendment of the Companies Act 2013, the CSR spending has been made compulsory with a spending of 2% of average net profit of the last three years. In the first paper, “Ownership Concentration, Corporate Governance and Disclosure Practices: A Study of Firms Listed in Bombay Stock Exchange”, the author, Pankaj M Madhani, explains the significance of internal corporate governance mechanism such as ownership concentration and analyzes the effects of ownership concentration on corporate governance and disclosure practices of firms. Ownership concentration is a significant internal governance mechanism in which owners can control and influence the management of the firm to protect their interests. This study identifies and tests the empirical evidence for relationship between ownership concentration and corporate governance and disclosure practices. The sample for the study comprises firms listed in the Bombay Stock Exchange (BSE) and selected from nine different sectors of the S&P BSE sectoral indices.

This paper also studies ownership concentration in terms of promoters’ holding in Indian firms that are predominantly of family origin and promoter controlled. Hence, such ownership effect provides promoters enough control over the management of the firm. The ownership concentration provides two offsetting effects: substitution effect and expropriation effect. From this perspective, the paper explains principal-agent agency theory as well as principal-principal theory. As shareholding patterns in India show a high level of promoters’ concentration, it is interesting to see whether external efforts at improving corporate governance would succeed as it happened in economies of dispersed ownership. The paper concludes that promoters’ holding have a negative but insignificant correlation with corporate governance and disclosure practices of firms.

In the second paper, “Corporate Social Responsibility of Banks and Public Awareness: A Study in Assam”, the authors, Amrita Das and Joyjit Sanyal, analyze the role played by corporate businesses in social development. The research specifically looks into Indian private and public sector banks and conducts case studies of four banks. The main purpose of this study is to find out the thrust area and scope of CSR activities from the point of view of common public and also to find out the gap in the CSR activities carried out by the banking institutions and expectation of common public regarding the CSR areas. In order to fulfill the above purpose, a comparative analysis of both public and private sector banks for the past five years (2010-11 to 2014-15) was done to identify their CSR activities. The areas of CSR activities being vast in nature cannot be studied totally, and as a result, only specific areas that have been mentioned in the annual reports of the banking institutions have been included in the study. This study is based on both primary and secondary data. The analysis has been carried out in two parts: the first part shows the areas and the unique activity being undertaken by each individual bank and the second part of analysis shows the views of general public on CSR activities carried out by each bank.

The paper also highlights that the corporate needs to play a vital role and support the initiatives of the government for the development of the society. The banking sector in India is showing much interest by incorporating more CSR activities, but its CSR reporting practices are far from satisfactory. Absence of mandatory provisions regarding reporting of CSR practices is causing negligence in the issue of reporting. So, there is need of a standard reporting format to be adopted by the banking institutions which will not only bring uniformity but can also be clearly understood by the general public. Further, the study found that in the case of North-East region of India the CSR activity is very negligible; also the general public lacks awareness about it.

--Pankaj M Madhani
Consulting Editor