In recent years, more and more Indian companies have been raising capital overseas by getting themselves listed on international stock exchanges. These efforts have been accompanied by the Indian government's drive to attract more foreign direct investment (FDI). Both factors have gone hand in hand with the realization that if Indian companies want more access to global capital markets, they will need to make their operations and financial results more transparent. In other words, they will need to improve their standards of corporate governance.
The Securities and Exchange Board of India, or SEBI, which regulates India's stock markets, took a major step in this direction a year ago. It asked Indian firms above a certain size to implement Clause 49, a regulation that strengthens the role of independent directors serving on corporate boards. Have these steps made a difference to corporate governance in Indian firms? In the first of a two-part interview, India Knowledge@Wharton spoke about these issues with professors Jitendra Singh and Mike Useem of Wharton's Management Department who, with their colleague Harbir Singh, are putting together an Executive Education program in Mumbai on Corporate Governance in India.
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