ONLINE CORPORATE GOVERNANCE DISCLOSURE PRACTICES IN BSE SENSEX AND NSE NIFTY COMPANIES

A SYNOPSIS

(SUBMITTED FOR THE PARTIAL FULFILLMENT OF THE MASTER OF Degree of commerce in international b !ine!!"

UNDER THE SUPER#ISION OF$ SUBMITTED BY: Prof %Pramo& ' mar HEAD.r& SEM% DEPT%OF A**OUNTAN*Y / LA0 / DEAN FA*ULTY OF *OMMER*E Pri(an)a *+a,la M%*OM

DAYALBAGH EDUCATIONAL INSTITUTE (DEEMED UNIVERSITY) Dayalbagh

AGRA! "#$%
ONLINE CORPORATE GOVERNANCE DISCLOSURE PRACTICES IN BSE SENSEX AND NSE NIFTY COMPANIES
Introduction: Corporate governance:
Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders/members, management, and the board of directors. Other stakeholders include labour (employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large. n important theme of corporate governance is to ensure the accountability of certain individuals in an organi!ation through mechanisms that try to reduce or eliminate the principal"agent problem. #t is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers, and complying with the legal and regulatory re$uirements, apart from meeting environmental and local community needs. %eport of &'(# committee (#ndia) on Corporate )overnance defines corporate governance as the acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. #t is about commitment to values, about ethical business conduct and about making a distinction between personal * corporate funds in the management of a company.

Profile of BSE and NSE

Bombay stock exchange BSE! #t is the very first stock e+change in the whole sia. #t is around in ,-./ when one 0arsi man and four

)u1arati men who are the stock brokers under banyan tree and near the 2umbai3s Town 4all, locations of the meetings changes as the people increases. This banyan tree is still available in the 4orniman Circle 0ark in the city of 2umbai. #t has become a huge group in around ,-56 of around 77 stock brokers and they move to 8alal &treet and in the ne+t year there emerges a new group with name 9The :ative &hare * &tock (rokers ssociation3. #n ;anuary ,-<< the (rokers 4all is inaugurated by ;ames 2. 2aclean. s the =irst >orld >ar ended this (&' office is shifted to a building in ,<7- which is near the (ombay Town 4all at present. #n the later ,<./s it comes under the notice of the )overnment of #ndia. #t comes as (&' &':&'? in the late ,<-/s and also gives (&' a mean to measure the performance of the stocks and e+change. One of the famous and leading stock brokers of that time is 0remchand %oychand@ he set out many new traditions and rules in the market which are still followed in the market. Bombay Stock Exchange changes to the electronic trading system in ,<<., it takes a time of fifty days to convert it. #n the year of 7/// there come the derivatives of this market on the basis of the same inde+, trading future contracts. #n the ne+t preceding years, BSE begins to e+pand its platform of trading by developing &':&'? with e$uity derivatives. The electronic and automatic system which is based on the screen is called (&' Online trading commonly known as (OAT. The stock market is growing day by day and it has grown more than four times from the month of ;anuary ,<</ to till the date. #f we see the market from the month of with the standard deviation ofC.D5B. t present it has around - million orders in a day to deal with. (&' also lead to the world3s first internet based trading system which is centrali!ed. #t is situated at the 0hiro!e ;ee1eebhoy Towers in the 8alal &treet at =ort rea. There are nearly C.// companies in #ndia which are well established and are listed in pril of the year ,<5< then the long run rate return of the market of the (&' &':&'? is around /..7B in a week which is continuously compounded

the market which also has a good trading volume. The present plot where the building of the (&' stands, in the 8alal &treet is bought in the year of ,<7- and the building is constructed in the year of ,<C/. t present it has 7- storied building ;ee1eebhoy Tower at the same place where the old building used to stand. The name of the Tower is derived from the name of &ir 0hiro!e ;amshed1ee ;ee1eebhoy who was the chairman of (ombay &tock '+change from the year of ,<DD and till the year of ,<-/ till he met his death. National stock exchange The :ational &tock e+change was incorporated for the first time in :ovember, ,<<7. The national stock e+change was not incorporated as the national stock e+change@ rather, it had got the recognition of the recogni!ed stock e+change in pril, ,<<C. The :ational stock '+change has increased its trading facilities in ;une ,<<6 when the >82 (>holesale 8ebt 2arket &egment) was gone live. #t is basically one of the three market segments in which the national stock '+change works. #n the same year, ,<<6 :ovember, the Capital 2arket (C2) segment of the stock e+change goes live through E& T. The :ational &tock '+change has become the first Clearing Corporation in #ndia by the introduction of :&CCA in pril ,<<.. #n the same year, ,<<. ;uly, it has introduced the #nvestor protection fund which is a very important function introduced by the national &tock '+change. The :ational stock '+change had grown with leaps and bounds and had shown tremendous growth mainly in all the fields and thus making it the largest stock e+change of #ndia by October, ,<<.. The concept of :&CCA was e+tended by the introduction of clearing and settlement with the help of :&CCA in year ,<<D. The :ational stock '+change has introduced its #nde+ for the first time in year pril ,<<D. The inde+ was known as the &*0 C:? :ifty #nde+. #n year ;une ,<<D, it has introduced the &ettlement )uarantee =und. The :ational &ecurities 8epositor =und was launched by the :ational &tock e+change in year ,<<D, :ovember, and thus making it the first stock e+change who becomes the first depository in #ndia. (ecause of the efforts and introduction of new concept in the field of trading, the :ational stock '+change has received the ('&T #T F& )' award by the computer &ociety of #ndia in the year :ovember, ,<<D. #t has also received an award for the TO0 #T F&'% in the name of G8ata$uest awardH in year 8ecember, ,<<D.

The :ational stock e+change has also introduced another inde+ in year 8ecember ,<<D in the name of C:? :ifty ;unior in year ,<<D. #t had again received an award for the ('&T #T F& )' award by the computer &ociety of #ndia in the year 8ecember, ,<<D. #n 2ay, ,<<- it had launched its first website. =urther in October ,<<<, it had launched the :&'.#T AT8. =urther in year October, 7//7, it had launched the )overnment securities inde+. The growth of the :ational &tock '+change has been tremendous in every field. #t had introduced several programmes and has achieved various achievements and awards while working best in the field in which it is working. The efforts and hard work that is contributed by the :ational &tock e+change has been tremendous and thus making an important and uni$ue stock e+change in #ndia.

Indian of "evie# of literature$

&"E&, S$N% &'()%" *E&" ,. 2ichael 7//N$ *oung3454 2ike 6$ Peng74 0avid &hlstrom8 4 1arry 0$ Bruton94 *i -iang: (I(+E C%'N("* #ndia %B-EC(I.E 0rincipalI principal conflicts between controlling shareholders and minority shareholders result from concentrated ownership, e+tensive family ownership and control, business group structures, and weak legal protection of minority shareholders. /IN0IN1S %esulting integration provides a foundation upon which future research can continue to build.

C&'(&'a )* G&+* ',a, -* ., E/*' g.,g E-&, &/.* 0: A R*+. *1 &2 )h* P'.,.(al3 P'.,.(al P*'0 (*-). +*

7.

;arin S$ khanna

7//-

(ankruptcy #ndia and the %esolution of =inancial 8istress

The use of private and court" supervised mechanisms for resolving default and reorgani!ing companies in financial distress.

This study emphasis that corporate governance iss ues relating to distressed restructurings and the magnitude of the costs and the efficiency of bankruptcy reorgani!ations among covered. the are topics

C.

Ch'.0)& (h*' P4 Cl.22&'5

7//-

Ealue #ndia Creation or 8estruction 4edge =unds as &hareholder ctivists

6.

6erner kishore

7//<

:ew 2odel of #ntegrityJ n ctionable 0athway to Trust, 0roductivit y and Ealue.

#ndia

>hen hedge funds accumulate more than .B of a firm, they must file a regulatory disclosure with the &'C that indicates whether their investment intentions are active or passive #n this new model, we distinguish all four phenomena " integrity, morality, ethics, and legality " as e+isting within two separate realm

T+i! !t &( em1+a!i! t+at 0e concl &e t+at t+e ret rn! to t+e +e&ge f n& are larger for t+eir acti2e bloc)! t+an t+eir 1a!!i2e bloc)!in&icating t+at acti2i!t !+are+ol&er! ma( !e +ig+er ret rn! to mitigate t+e co!t of t+eir monitoring effort%

#n this study we analysis that >e assert that integrity (the condition of being whole and complete) is a necessary condition for workability, and that the resultant level of workability

..

)enry )an<a

7//<

gency 0roblems, Aegal &trategies, and 'nforceme nt

#ndia

This article is the second chapter of the second edition of KThe natomyH

This study emphasis that >e conclude strategies e+tensive that regulatory more enforcement re$uire

mechanisms " in the form of courts and procedural rules " to secure compliance than do governance strategies.

D.

0irk Songhai

7/,/

C'O #ndia Compensati on

The rapid rise in C'O pay over the past C/ years has sparked an intense debate about the nature of the pay" setting process. 2any view the high

#n this study researcher suggests that both managerial power and competitive market forces are important determinants of C'O pay, but that neither approach is fully consistent with the available evidence. >e briefly discuss promising directions for future research

International revie# of literature

&"E&, S$N% &'()%" *E&" (I(+E Country %B-EC(I.E /IN0IN1S

,.

2egumi &uto

7//C

Capital &tructure and #nvestment (ehavior of 2alaysian =irms in the ,<</sJ a study of corporate governance before the crisis

2alaysia

This is an empirical study analy!ing the corporate finance and governance structure in 2alaysia before and after the financial crisis of ,<<5, utili!ing the agency cost approach.

These results imply that the concentration of risks on the banking sector and social policy advocating the dispersion of corporate ownership weakened the corporate governance mechanism, thereby e+acerbating the distress of 2alaysiaLs corporate sector during the financial crisis.

7.

4alit )onenc and C. (ulent ybar

7//D

=inancial Turkey Crisis and =irm 0erformanceJ empirical evidence from Turkey

C.

;ames ;inho Chang and 4yun"4an

7//D

)overnance &ystem 'ffectiveness =ollowing

To e+amine the impact of concentrated ownership and business group affiliation on the performance of Turkish firms during the financial crisis by controlling balance sheet currency e+posure, international involvement and firm si!e. Corporate governance initiatives were adopted

there is weak evidence that stock market performance increases with the level of business group diversification

These findings have implications for the effectiveness of corporate governance

&hin

the CrisisJ the case of Morean business group head$uarters

6.

;inho Chang, Noung ;un Cho and 4yun"4an &hin

7//5

The Change in Corporate Transparenc y of Morean =irms fter the sian =inancial CrisisJ an analysis using analystsL forecast data

in Morea following a ma1or corporate governance failure, identified as a direct cause of the sian =inancial Crisis of ,<<5I,<<-. this study e+amines the change in information asymmetry of Morean firms around the financial crisis of ,<<5

in F& firms following governance restructuring imposed by the &'C, the government and various market participants

=indings shows that the information asymmetry of Morean firms is lower after the financial crisis than before, implying that corporate transparency did, in effect, improve with the change in business environment

..

lessandr o Oattoni, Torben 0edersen and Eikas Mumar

7//<

The 0erformance of )roup" affiliated =irms during #nstitutional TransitionJ Aongitudinal &tudy of #ndian =irms Corporate &ocial %esponsibilit y, Corporate )overnance

This article e+plores the link between firm performance and the evolution of the institutional environment. #s the relationship between financial transparency

>e analy!e how business group affiliation affected firm performance in #ndia

(o (ae Choi, 8oowon Aee and Noungkyu

7/,C

C&% ratings are negatively correlated with the level of earnings management when all firms are

0ark

and 'arnings PualityJ 'vidence from Morea

and C&% activities affected by the business group affiliation and ownership structure of firms

considered

Needs of the study

#n present scenario corporate governance is a most important because it sets up the rules of the game to deal with issues arising from separation of ownership and management so that the interests of all stake holders are protected and it viewed as protection of investors interest and a sound risk management .corporate governance is also concerned with the values, vision and visibility. #t is about the value orientation of the organi!ation, ethical norms for its performance, the direction of the development and social accomplishment of the organi!ation and the visibility of the performance and practices. #t shows that transparency and accountability its shareholder and stake holders. Corporate governance deals with ways to take effective strategic decision and it also ensure that all shareholders fully e+ercise their rights %b<ective of the study: ,. To study the role of &'(# (security e+change board of #ndia) in Corporate )overnance 8isclosures. 7. To e+amine corporate governance practices of (&' sensex companies and :&' nifty in different ways. C. To make comparison between (&' sensex and :&' nifty on Corporate )overnance. 6. To make recommendations on Corporate )overnance issues in #ndia. "esearch 2ethodology: This is an analytical study which provides an overview and e+amination of the likely changes of corporate governance on companies with particular references of #ndian companies. This study identifies (&' sense+ companies and :&' nifty companies. "esearch 0esign:

The research design for the study will be descriptive as well as analytical because it will be carried out with specific ob1ectives and utili!es the large number of data of the listed #ndian companies (&' and :&'. Sample: =or attaining different ob1ectives the company which are the part of (&' sensex and :&' Nifty on 3=>9= 7>3>$

0uration of the study: =or the purpose of analysis of data, a period of three financial years from 7/,/"7/,,, 7/,7"7/,C will be taken into consideration. 7/,,"7/,7, and

Sample 0ata
The relevant data will be collected from secondary sources comprises of published reports like %eports on Trend and 0rogress of (anking in #ndia, Earious reputed ;ournals and 2aga!ines, >eb &ites, 0eriodicals, :ewspapers and nnual %eports published by Companies.

Statistical (ools
=or the data analysis T"Test, :OE s will be used for the significance of 4ypothesis Testing

P"%P%SE0 P+&N %/ ()E S('0*: C)&P(E"=3 C)&P(E"=7 C)&P(E"=8 C)&P(E"=9 C)&P(E"=: C)&P(E"=? #ntroduction %eview of Aiterature (rief 0rofile of selected companies 8ata nalysis and #nterpretation Conclusion, findings and suggestion %eference and (ibliography

"eference:
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Bibliography: 6ebsites

8etails about corporate governance norms. httpJ//www.sebi.org 8ata regarding (&'"C/ Companies. httpJ//www.bseindia.com Books Corporate governance ll (&'"C/ companies3 websites for their nnual reports.

rya 0. 0. Tandon (. (. Eashint . M.

Corporate )overnance":ew paradigm )opalsamy :

Corporate )overnance 0utting #nvestors first &cott C. :ew$uist, 2a+ (. %ussell