Introduction

Corporate governance is the current buzzword in business jargon. It has become a subject of discussion in corporate boardrooms, academic circles, and governments around the globe. High profile corporate collapses in India (for example, Harsad Mehta’s securities scam, the Ketan Parikh scam, the C. R. Bansal scam, and, most recent of all, the Satyam fraud), and overseas (for example, the Junk Bond scam, Qwest, Global Crossing, Andersen, Enron, and WorldCom), have shattered the dreams of various investors, shocked governments and regulators alike and led to a questioning of the accounting practices of statutory auditors, and of corporate governance norms. Unethical business conduct and behavior, failure of boards of directors, flaws in external audits, failure in corporate strategies, unfettered power in the hands of the chairman/chief executive officer (CEO), lack of transparency, inadequate disclosures, fraud, lack of proper internal audits, weak internal control, the dubious role of rating agencies, and inadequate regulatory mechanisms are the most common governance problems or flaws noticed in all such corporate failures in India, the US, the UK, and other parts of the world.