Volume 14, Number 4 Article by Samir K Barua December, 2002
Corporate Governance and Ethics :
Will a model ever be found that would guarantee ethical corporate behaviour? Samir Barua, Professor, IIM Ahmedabad, traces the efforts of governments worldwide, including the setting up of the Treadway Commission (USA), the Cadbury Committee (UK), the King Committee (South Africa) and the National Task Force on Corporate Governance (India) in the last decade and a half, to ensure corporate governance. The improvements in the 90s in the accounting and reporting standards, the regulatory and supervision framework, the composition and functioning of boards and the apparent efficiency of the capital markets led to a sense of complacency that at last a consolidated approach had been found to ensure that firms conducted their business with the objective of maximisation of shareholder value without compromising the other stakeholders. But the 1997 crises in the East Asian countries, and Enron in 2001 followed by discoveries of similar practices by several respected US corporations, have led Prof Barua to conclude that the quest for such a model is like the search for the philosophers’ stone that would convert base metals into gold. In India too, as long as the atmosphere remains corrupt and corruptible, there is little hope for significant improvement in the behaviour of the corporate sector.
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