Risk management has emerged as an important area of focus for both the regulators and the board of directors in the past few years. The need for effective risk management arose from corporate failures through excessive risk taking on the one hand and missed opportunities on the other. While risks are inherent part of every business, it is imperative that these risks are disclosed to investors in a transparent manner, for them to make better economic decisions and for efficient functioning of the capital market. There has been an increased interest of analysts and investors in risk disclosures. The board has a key role to play in risk disclosures. The research will examine the regulation of a few countries that has mandated risk disclosures. Study the annual report for risk disclosure practices and the quality of disclosures and analyze the determinants of risk disclosures
Gender diversity and inclusion are becoming key metrics for effective corporate governance globally, and India is no exception. The history of gender diversity in Corporate India is in its infancy. Only at the turn of this century has a more deliberate and sustained effort at bringing women into the workforce been embarked upon. In this report, we analyzed BRSR reports of companies that had made the mandatory disclosures till November 2023. 51 companies had not uploaded their disclosures then. 47 companies had incomplete data. The final data set comprised 902 companies. Using the global definitions of materiality, we argue that a gender diversity index is material in companies with more employees. When we filtered the data set, we found that 219 listed companies employ 82.6% of all employees and workers in India’s Top 1000. These companies are distributed across 22 sectors. The banking sector is the largest, with 50 companies, followed by IT, Textile, Pharma, Infrastructure, and the automobile sectors.
The Insolvency and Bankruptcy Code (IBC) is the Bankruptcy Law of India enacted in 2016 consolidating various existing laws/acts with a single, harmonized, and generic framework addressing multiple aspects relating to corporate insolvency and bankruptcy. Prior to the introduction of IBC, lenders could not easily process the legal battle as they had limited control over the corporate debtor’s business due to cumbersome processes and several loopholes of existing laws favouring the corporate debtor and inordinately delayed the process of debt recovery, resolution, and liquidation of firms. IBC is facilitating quick resolution of viable business units with change in ownership or other restructuring mechanisms and liquidation of unviable business units, improving the debt recovery process for banks and financial institutions. In this context, the IBC gives an opportunity to strengthen the corporate governance of both corporates and banks and can strengthen monitoring of borrowers with stringent loan covenants and corporate borrowers can consider diversified ownership pattern. The objective of the current study is to analyse the IBC in the context of Corporate governance.
This report is organized as follows; Chapter two presents review of IBC and the progress made, Chapter three analyses the corporate governance aspects of IBC with relevant case laws emphasizing protection of various stakeholders – debtors, creditors, and employees and discusses conflicts of interests between various stakeholders. Chapter four contains excerpts from roundtable conferences conducted in pursuance of the fulfilment of the needs of this project.
Although scant, academic research on the monitoring role of institutional investors does predate these recent global efforts at nudging their corporate stewardship of the companies in which they invest. Gerald and Davis (2005) show that activism by fund managers can affect the retention of corporate pension accounts that the fund families can manage. Implicitly giving the nod to the benefits of stewardship, Chou, Ng and Wang (2011), report that funds with better governance practices tend to vote more responsibly on decisions by portfolio firms. Qian (2012) tests the well-known Wall Street adage that portfolio managers “vote with their feet” when they disagree with a firm’s decision. She documents that this tendency is more likely in funds with a larger proportion of “vigilant” clients as opposed to funds with a larger number of less sophisticated investors. Butler and Gurin (2012) use SEC voting data to show that mutual funds whose managers are in the same educational network as the firm’s CEO are more likely to vote against shareholder-initiated proposals to limit executive compensation than out-ofnetwork funds are. Collectively, these studies argue for a careful empirical examination of mutual fund voting practices both in terms of price changes at the time of the vote as well as portfolio holding changes in its aftermath. That is the purpose of this investigation.
The Companies Act 2013 has brought in several changes with respect to corporate governance. One of the key changes is that related to the independent directors. The term independent directors has been defined, their duties, roles and responsibilities have also been articulated in Schedule IV to the Companies Act, 2013. Such an explicit recognition of the role of the Independent director is central to strengthening the corporate governance. Independent directors play an important role in ensuring good corporate governance in companies. However, in the recent years considerable questions have been raised on their effectiveness in monitoring and supervising the management. The spate of corporate scandals and the huge resignations of the independent directors have further raised concerns.
This study critically examines the role, responsibilities and duties of the independent directors. We interviewed the independent directors to understand and identify the key challenges faced by them. We also suggest certain elements that needs to be in place if the independent directors must perform effectively. Finally, we make certain policy recommendations to enhance the role of the independent directors.
There have been significant environmental changes, including climate-related events that are affecting the businesses in India and the world. The impact of these events is estimated to cost the global economy by 20 percent of its GDP over the next few years with serious economic consequences for the business. Inspite of such an alarming risk, very little is known on how corporates deal with sustainability in general and environmental sustainability in particular and their linkages to corporate risks in a strategy setting.
This exploratory study attempts to understand the state of environmental sustainability risk disclosures of a select 200 companies listed in the National Stock Exchange of India (NSE). We use content analysis to study the disclosures made in the Annual Report, Business Responsibility Report, Sustainability Reports and other allied reports presented by the companies to understand the levels of disclosures. Further, we study the extent of disclosures by the companies to understand the present state of engagement with environment sustainability and climate change and their integration with the mainstream risk management.
Our findings suggest that almost all companies have some basic general disclosures on risks this can mainly be attributed to the mandatory nature of disclosures in the annual report. However, companies do not disclose more than 37% of the total risk categories identified by the research. Only financial risks are discussed in detail. Environment Sustainability risk disclosure is poor, and the quality of disclosure is also low. Disclosures on climate change risks were even more opaque. It appears that the changes in the weather patterns have either not emerged as a significant cause of concern to be disclosed in the risk section or they companies have generally not disclosed the same. We also find that environmental disclosures are not integrated in a more comprehensive in the risk reports. We also find that companies had not integrated sustainability risk into the risk management framework and strategy mainly due to lack of understanding of the direct business impacts (quantification), lack of regulations and stakeholder pressure. Moreover, firms have a short-term outlook and are more focussed on quarterly results and profitability in the near term. Though reporting on environmental risks and climate change are weak, companies are taking initiatives on matters such as energy conservation, water, and waste management.
India has been keeping up with UN in devising policies to understand the impact of business on human rights. Hence, this article explores the content of the human right disclosures in the annual, sustainability , business responsibility reports and other policy documents of Indian business to see (1)whether there is any sector specific pattern in formulating human rights policies (2) what is the relevance and commitment level of firms with respect to human rights (3) to understand the quality of disclosures among Indian firms (4) how do companies express their understanding and interpretation on human rights through disclosures and are there any gaps ? This article attempts to address these questions by drawing data collected from National Stock Exchange (NSE) listed companies represented across seventeen sectors. In order to examine the trends in reporting, the disclosure period of 2012 -2017 has been considered.
Our findings suggest that there is a great deal of heterogeneity in the content of human rights reporting across the companies. We observe that there are significant differences in disclosures across companies within the same sector, where relevance in reporting with respect to their respective business is varied. This implies that companies do not view the rights on which their business may have greater impact. However, on a positive note, there is 51% increase in the reporting covering the rights especially facilitated by business responsibility reporting. A key pattern that was noticed was that public sector undertaking (PSU) that are state owned, if present in a sector, are doing better in disclosing the information in business responsibility report (BRR) format. Though not very detailed, the information provided by PSUs are found to be relevant to their respective sector. We also observe that business groups/conglomerates or family owned business across all sectors, that need not necessarily be a leader in their sector, are early adopters and tend to address/initiate more on human centric aspects such as employees (labor issues, their safety, health and growth), customer and community in which they operate besides compliance factors. On the other hand, other firms focus more on popular or trending aspects such as environment, sustainability, sexual harassment followed by other issues. We also observed a small subset of Multinational Corporates (MNCs) (that have either subsidiaries or have major stake but partnering with Indian firms) within the sample being analyzed. While they are on par with PSUs and Indian family managed/owned businesses, they are lagging behind in the areas of diversity/discrimination and inclusiveness and also on the aspect of freedom of expression. Moreover, with the Indian Companies Act (2013) making CSR (Corporate Social Responsibility spend of 2%) mandatory, there is an increased reporting on community engagement but not necessarily from a rights perspective. With respect to reporting format, we find that while business responsibility report (BRR) format helps to understand the fact that some basic discussion happens in the corporates, a standalone reporting such as GRI or any format of sustainability report captures more details that are voluntary disclosed. However, the relevance and clarity of details is still questionable. We also observe that presence of explicit human rights policies is limited and there is a dearth of content when it comes to commitment on human rights policies and companies focus more on being compliant especially with respect to business responsibility reporting rather than initiatives to protect or fulfil human rights.
This study aims to find the current status of Business Ethics across seven major sectors of corporate India, specifically the IT/Software, Health/Pharmaceuticals, Education, Government sector/ Public utilities, Financial Services, Consultancies, and Manufacturing sectors. With the knowledge of the current status of Business Ethics in these sectors, the study will outline the reasons for unethical behaviour, the existing flaws in the Code of Conduct/Ethics, the shortcomings in the Corporate Government system in the above mentioned sectors, the hurdles faced in implementing the Code of Conduct/Ethics, and examine if there is any type of unethical behaviour that is specific and highly prevalent in each sector. This study will also find out whether there is an impact on ethical behaviour on Corporate Governance. The final objective of this study is to provide a list of comprehensive recommendations as to how enhancing the role of Corporate Governance in Indian companies can reduce the prevalence of unethical behaviour.
More details
Research study on understanding the careers of mid-level technical women in India. Mid-level women professionals are of interest because they constitute the talent pipeline of the organization. The mid-career level is perhaps the most critical juncture for women on the technical ladder because it is here that a complex set of gender barriers converge -- work and family challenges arising out of life stage, significant role changes at work with higher responsibility which demand investment of time and effort to perform effectively and investments in self-development for career growth.
Corporate Governance (CG) has in recent times emerged as perhaps the most important issue in business and management, primarily because of its far-reaching impact on the society and its functioning, as demonstrated by some recent happenings in the corporate world. While the social and ethical value of good corporate governance is unquestionably clear, its role in enhancing the business value of corporations is not unambiguously demonstrated by research studies. The proposed study is an attempt to fill this gap.
This study analyses the governance structures of public debt markets; these are risk factors disclosed in offer institutions. The specific governance structures are bank covenants, audit disclosures and nominee directors and examines the effectiveness of bank nominee directors as a governance mechanism in improving the performance of firms. Trustees, Stock exchange norms for listed bonds/debentures and creation of Debenture redemption reserves, analyses governance mechanisms of the debt funded through banks and financial documents, rating migrations of credit rating agencies, Debenture
In this report, the study identify the top 25 directors in each of the years 2010-2012 and captured data for all directors of all listed companies. Our research also attempts to understand the connections of these 25 directors. The relationships between common directors help companies on which they are board members to be linked to one another. Sometimes this could be large companies sometimes this could be small companies therefore the network helps us identify companies that are connected to each other. These connections help companies to understand the best practices from each other and have many other benefits.
This study analyses the sustainability initiatives of most valuable firms in the Fortune 500 list. The methodology adopted involves analysing information disclosed on their Websites, including annual reports, sustainability reports, policies, and other documents. The study, sought to answer the question on what type of information related to sustainability and business operations were currently being disclosed and attempted to map the information based on industry type and sector, location and profit”
In this study, we find that board interlocks are quite widespread in India. Taking a (numerically) small but nevertheless (in terms of market capitalization) an important slice of available corporate data, we observed that in 2010, “highly boarded" directors (defined as those on the board of 5 or more listed NSE companies) who constitute just 6 percent of the overall pool of directors among NSE100 companies are associated with 486 NSE listed companies which account for a whopping 66 percent of the total market capitalization of all NSE listed companies.