Corporate governance focuses on three aspects, viz., fairness, transparency and accountability. This article explains the need for disclosure of corporate governance with a special focus on Infosys Ltd., a company well-known for its disclosure practices. It was awarded the National Award for Excellence in Corporate Governance in 2000, by the Government of India, and the company's disclosure and corporate governance practices are now being taken up as a role model by companies in the US.

Corporate governance refers to the mechanism and arrangements employed by financiers and shareholders, lenders and so that their interests are taken care of by the agents who have considerable residual control rights in practice.

Traditionally, corporate governance focused on conflict of interest between managers and owners, i.e., the agency problem that arises from the separation of management and finance. But increasingly, several forms of agency problems became recognized. Management may act in their own self-interest, which may lead to corporate failure. Problems were reported at various reputed companies like Enron, WorldCom, Global Crossing, Adelphia and others. This gave birth to the need for a formal regulation on corporate governance.

The system of corporate governance consists of various checks and balances. It also asks for appropriate inputs into the management of the company. It also deals with questions like how do financiers exercise control over managers? And how do financiers ensure that managers do not steal the resources placed with them, or squander them on uneconomical projects?

Corporate Governance Building Investors, Infosys Technologies Limited, Enron, WorldCom, Global Crossing, Adelphia, Chartered Accountants of India, ICAI, Financial transactions, Ratan Tata, Securities and Exchange Board of India, Sebi, Financial markets, National Foundation for Corporate Governance, NFCG.