Good Governance and Corporate Governance

The relevance of good governance and spiritual transformation has increased manifold owing to increasing competition among the corporate. The corporate in mad race to maximize profits, have turned into profit churning machines. This has an adverse impact upon the society and the employees of the organization. The recent data from various agencies like Ministry of Corporate Affairs, Ministry of Environment reveal the increasing number of legislations against violation of the environmental and governance norms by the corporate.

The newer emerging regulations have given rise to a “Prisoners’ Dilemma”. If the corporate cooperate and comply with the existing regulations pertaining to social welfare, they get incentivized in form of tax sops and increase in brand value. If they don’t cooperate, they are penalized heavily.

This paper is aimed at analyzing the various factors such as the payment mechanism and group incentive plans, the principal – agency problem arising due to delegation of decision making to managers as the reason for increasing violation of norms and deterioration in governance levels. We intend to do a chi square based hypothesis testing on compliance and good governance for the corporate. The secondary data was collected on whether the corporate has a sustainability policy, number of Corporate Social Responsibility initiatives, number of independent directors, number of women directors, number of litigations if any in the past, amount spend on Corporate Social Responsibility, awards and accolades won by the organization.

More data was collected from Ernst n Young IACC report on Corporate Social Responsibility and KPMG report on CSR (Corporate Social Responsibility). This data collected was further analyzed using Chi square testing and coefficient of determination.

This paper aims to deploy descriptive research to analyze the extent of corporate compliance with Corporate Social Responsibility regulations and its impact on shareholders wealth maximization.