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Diverse Roles of Corporate Board: A Review of Various Corporate Governance Theories
--Pankaj M Madhani
The board of directors (i.e., board) has generally been perceived as the backbone of corporate governance. Board is one of the most important internal corporate governance mechanisms used by the shareholders to monitor management. Board has diverse functions and roles such as control role, strategic role, service or resource provision role and advice and counsel role. There are many theories of corporate governance to explain such diverse roles of corporate boards. Any single corporate governance theory cannot fully explain the complexity and heterogeneity of the board functions in a corporate business. Hence, this research study reviews some of the corporate governance theories with a view to understanding how board functions and how board compositions are related to firm performance. This study looks at four main theories, namely, agency theory, stewardship theory, resource dependency theory, and resource-based view theory, that have influenced corporate governance development related to board functions.
© 2017 IUP. All Rights Reserved.
Normative Ethical Theories as Frameworks for Better Corporate Governance: A Practitioner’s Perspective
--Malla Praveen Bhasa
Corporation is a unique, complex and amongst the most influential social institutions that has ever existed in human history. Actions taken by corporations impact the societal ecosystem that they operate in. Beginning 1950, with Howard Bowen’s call for corporate social responsibility, ethicists have channeled their focus on corporate behavior. Today, there is a huge body of scholarly literature on business ethics prescribing what constitutes ethical corporate behavior. However, corporate greed seems to surpass all boundaries with each passing year and scams have gained mainstream status. This paper makes an attempt at drawing the attention of ‘ethics’ researchers as well as business practitioners to various ethical theories that complement business actions. As a practitioner, the author feels that among all the normative ethical models, ‘value theory’ offers a potent framework to base one’s business actions in. An action is right or wrong based on how the value seeker perceives value and how an individual is affected by it. Corporations should appreciate the value cognitions and value judgments made by their stakeholders to deliver the right value which is construed ethical, irrespective of whether it is right or wrong in act.
© 2017 IUP. All Rights Reserved.
The Relationship Between Corporate Social Responsibility and Financial Performance of Indian Banks
--Geetika and Akanksha Shukla
Corporate Social Responsibility (CSR) is well recognized across the world as various international bodies, government authorities and regulators are taking cognizance of the matter and framing guidelines to be adopted by the corporate. The social concern of corporate has taken the front seat in the forum of issues related with good governance practices to achieve sustainability. But still the type of industry for which CSR is relevant is under question. The present paper attempts to answer the question by determining the impact of CSR on the financial performance of the banks. It uses regression analysis to determine the impact of CSR expenditure on the financial performance of banks, measured using Profit After Tax (PAT), Return on Assets (ROA), Return on Equity (ROE) and market capitalization of the banks. As a result of the study, a validated model is developed, which shows a positive relationship between CSR expenditure and different measures of financial performance while firm size is controlled.
Corporate Governance Practices of Turkey:
A Critical Review
--Metin Toprak and Yuksel Bayraktar
Awareness about corporate governance began in 2002 and 2003, following the publications of international organizations on the same. In addition to the Capital Market Board (CMB), NGOs have had a key role to play in the development of the corporate governance system in terms of internal audit, internal control, risk management and strategic planning. The external financing of the Turkish companies was heavily based on banks (external finance) as in the continental Europe. Due to the dependence on foreign financing, development of corporate governance was relatively delayed when compared to the Anglo-Saxon countries such as the UK and the US. Reference to corporate governance appeared in a communiqué of CMB, for the first time, in 2003. Later, the banking law covered a chapter on internal systems that aimed at corporate governance. The Turkish Commercial Code, renewed in 2011, mentioned corporate governance and assigned the regulatory authority of corporate governance to CMB. Finally, the CMB law was renewed in 2012 and regulated corporate governance in detail was laid out, and it reinforced the authority of the CMB over other governmental institutions. CMB law made it mandatory for Bourse Istanbul (BIST) companies to implement corporate governance regulations. On evaluating the performance of the companies that implemented corporate governance with the non-implementing companies, it is found that the performance indexes of both the sectors do not differ significantly. It can be said that corporate governance in Turkey is still treated as a set of procedures and needs time to be internalized.
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