IPO Study

AWARENESS OF CORPORATE GOVERANCE IN
EMPLOYEES: A STUDY OF PROFESSIONALS AND NONPROFESSIONALS
SEEMA MEHTA
Prestige Institute of Management

TARIKA SINGH
Prestige Institute of Management

S. S. BHAKAR
Prestige Institute of Management

UMESH HOLAI
Jiwaji University
Corporate governance has recently emerged as an issue of global significance. The present era is of intense global competition with customers becoming more knowledgeable and demanding. Not only the customers but also the shareholders are becoming increasingly aware of the present competitive environment. Customers rank firms based on ability to invest and manage physical assets, competition and the ability to exploit intangible assets, transparency of operations and soft assets.
There is some evidence, albeit inconclusive, to suggest that there is a positive relationship between corporate governance and improvements in corporate performance. The paper investigates the awareness level of corporate governance among professionals and non professionals in Gwalior region. The study resulted in six underlying factors for corporate governance viz., social responsibility, legal system, competitive advantage, long term, transparent system, and healthier practice. The findings of the paper reveals that the there is no significant difference in the awareness of corporate governance among professionals and non-professionals. Also results of the z test applied between professionals and non-professionals for the difference in factors gave the similar results.
Only for one factor competitive advantage, the level of awareness among professionals and non professionals was found to be different.

In its narrowest sense, corporate governance is about how an organization is directed and controlled. It is about the structures and processes in place to facilitate and monitor effective management of an organization, including mechanisms to ensure legal compliance and prevent improper or unlawful

References: Aoki, M. 1993. Japanese Capitalism: Past, Present, Future. Paper presented to Columbia University Law School’s Center for Law and Economic Studies, New Barney, J. B., & Ouchi, W. G. 1986. Organizational Economics: Toward A New Paradigm for Understanding Biais, B., & Perotti E. 2002. Machiavellian Privatization. American Economic Review, 92: 240-258. Baysinger, B. D., & Butler, H. 1985. Corporate Governance and the Board of Directors: Performance Effects of Changes in Board Composition Bebchuk, L., & Roe, M. 1999. A Theory of Path Dependence in Corporate Governance and Ownership Blair, M. M. 1995. Ownership and Control: Rethinking Corporate Governance for Twenty-first Century Bushee, B. 1998. The Influence of Institutional Investors on Myopic R&D Investment Behavior Dalton, D. R., Daily, C. M., Johnson, J. L., & Ellstrand, A. E. 1999. Number of Directors and Financial Performance: A Meta-Analysis Donaldson, L. 1990. The Ethereal Hand. Organizational Economics and Management Theory, 15(3): 369-81. Donaldson, T., & Preston, L. E. 1995. The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications Eisenhardt, K. M. 1989. Agency Theory: An Assessment and Review. Academy of Management Review, 14(1): 57-74. Fama E., & Jensen, M. 1983. Separation of Ownership and Control. Journal of Law and Economics, 26: 301-25. Gompers, P., Ishii, J., & Metrick, A. 2003. Corporate Governance and Equity Prices. Grossman, S. J., & Hart, O.D. 1980. Disclosure Laws and Takeover Bids. Journal of Finance Hilmer, F. G. 1993. Strictly Boardroom: Improving Governance to Enhance Company Performance Hollingsworth, J. R., Schmitter, P., & Streeck, W. 1994. Governing Capitalist Economies: Performance and Control of Economic Sectors Jensen. M. C. 1986. Agency Costs of Free Cash Flow, Corporate Finance and Takeovers Jensen, M. C., & Meckling, W. 1976. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure Lee, J. 2004. The Effects of Family Ownership and Management on Firm Performance. Mayer, C. 1997. Corporate Governance, Competition and Performance. Journal of Law and Society, 24: 152-176. Morck, R., Shleifer, A., & Vishny, R. 1988. Management Ownership and Market Valuation: An Empirical Analysis McConnell, J. J., & Servaes, H. 1990. Additional Evidence on Equity Ownership and Corporate Value Randøy, T., Oxelheim, L., & Stonehill, A. 2001. Global Financial Strategies and Corporate Competitiveness Shleifer, A., & Vishny, R. W. 1997. A Survey of Corporate Governance. Journal of Finance, 52 (2): 737-783. Walsh, J. P., & Seward, J. K. 1990. On the Efficiency of Internal and External Corporate Control Mechanisms