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A Comparative Study of Corporate Governance in India and the USA
American Journal of Economics and Business Management,
Vol. 7 No. 10 (2024): October
Abstract
This paper explores the concept of corporate governance with the comparison in governance framework, board structure and its role, Shareholder Rights and Activism, Enforcement and Compliance, Remuneration to Board Members, Executive Compensation, Terms of service of Directors, Composition of the Board of Directors in corporate governance of two major countries USA and India. The study reveals that most of the practices of the Corporate Governance are common but also there is dissimilarities in terms of board size, board composition and independence, leadership structure, and gender diversity in both India and Unites States. The study indicates that US Companies have larger board with majority of independent directors prominence of combined leadership structure, relatively more gender diverse as compared to India. The U.S. system benefits from a well-established regulatory framework with strong enforcement and active shareholder engagement. In contrast, India’s governance framework is evolving with recent reforms aimed at improving practices, but challenges such as family-run businesses and inconsistent enforcement remain.
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- Bebchuk, L. A., & Fried, J. M. (2004). Pay Without Performance: The Unfulfilled Promise of Executive Compensation. Harvard University Press.
- Berle, A. A., & Means, G. C. (1932). The Modern Corporation and Private Property. Macmillan.
- Coffee, J. C. (2007). Gatekeepers: The Professions and Corporate Governance. Oxford University Press.
- Clarke, T. (2007). International Corporate Governance: A Comparative Approach. Routledge.
- Gilson, R. J. (2001). Globalizing Corporate Governance: Convergence, Resistance, and Practice. Columbia Law Review, 101(6), 1669-1699.
- Hamid, N. A., & Al-Haj, T. (2011). Corporate Governance and Firm Performance: Evidence from Jordan. International Journal of Business and Social Science.
- Hill, J. L. (2013). The New Governance: A Comparative Study of Corporate Governance Models. Cambridge University Press.
- Khanna, V., & Palepu, K. (2000). The Future of Indian Capital Markets. Harvard Business Review.
- Klapper, L. F., & Love, I. (2004). Corporate Governance, Investor Protection, and Performance in Emerging Markets. Journal of Corporate Finance, 10(5), 703-728.
- La Porta, R., Lopez-de-Silanes, F., Shleifer, A., &Vishny, R. W. (1998). Law and Finance. Journal of Political Economy, 106(6), 1113-1155.
- Mallin, C. A. (2010). Corporate Governance. Oxford University Press.
- Nair, A., & Bansal, N. (2015). Corporate Governance in India: Issues and Challenges. International Journal of Business Governance and Ethics.
- Roe, M. J. (2003). Political Determinants of Corporate Governance: Political Context, Corporate Impact. Oxford University Press.
- Shleifer, A., &Vishny, R. W. (1997). A Survey of Corporate Governance. Journal of Finance, 52(2), 737-783.
- Spalding, A. A. (2008). Corporate Governance and Corporate Social Responsibility: A Comparative Analysis. Journal of Business Ethics, 80(2), 323-342.
- Executive Performance and Rewards Survey Report. 2024.
- “Culture and Corporate Governance Principles in India: Reconcilable Clashes?” IFC, 2023, www.ifc.org/en/insights-reports/2011/pso-23-culture-and-corporate-governance-principles-in-india-reconcilable-clashes.
- Haan, Sarah. (2023) “Voting Rights in Corporate Governance: History and Political Economy.” The Harvard Law School Forum on Corporate Governance, corpgov.law.harvard.edu/2023/01/31/voting-rights-in-corporate-governance-history-and-political-economy/.
- Lekatis, George. “Sarbanes-Oxley Act.” Sarbanes-Oxley-Act.com, 2024, sarbanes-oxley-act.com/. Accessed 20 Aug. 2024.
- Mukherjee, Writankar. “Compensation Gap between CEO & Median Employee Widens in India Inc from Pre-Pandemic Years, Finds et Study.” The Economic Times,
- www.pwc.in/press-releases/2024/50-of-indian-businesses-plan-to-prioritise-tax-transparency-in-esg-practices-pwc-india-survey.html. Accessed 20 Aug. 2024.
- Sarkar, Jayati. “Board Independence & Corporate Governance in India: Recent Trends & Challenges Ahead.” Indian Journal of Industrial Relations, vol. 44, no. 4, 2009, pp. 576–592, www.jstor.org/stable/27768232. Accessed 20 Aug. 2024.
- SEBI. “Securities and Exchange Board of India.” Sebi.gov.in, 2020, www.sebi.gov.in/. Accessed 20 Aug. 2024.
- Shetty, Shaneen Parikh, Namita. “Protection and Redressal of Minority Shareholder Rights.” India Corporate Law, 6 Mar. 2023, corporate.cyrilamarchandblogs.com/2023/03/protection-and-redressal-of-minority-shareholder-rights/. Accessed 20 Aug. 2024.
- Tonello, Matteo. “Shareholder Voting Trends (2018-2022).” The Harvard Law School Forum on Corporate Governance, 5 Nov. 2022, Corpgov.law.harvard.edu/2022/11/05/shareholder-voting-trends-2018-2022/. Accessed 20 Aug. 2024.
- A. Shivani, "Corporate Governance: comparative study", IJNRD - International Journal Of Novel Research And Development (www.IJNRD.org), ISSN:2456- 4184, Vol.7, Issue 12, page no.a572-a586, December-2022, Available: https://ijnrd.org/papers/IJNRD2212079.pdf
- Mehrotra, S. (2015). Corporate Board Structure in the United States and India: A Comparative View. Indian Journal of Corporate Governance, 8(2), 166-186. https://doi.org/10.1177/0974686215602388
- Bhanotu, A study on Corporate Governance Practices in USA, UK & India - A comparative Analysis, Shodh Sanchar Bulletin Vol 10, Issue 40, Oct-Dec 2020, Page No 29-35, https://www.researchgate.net/publication/376191048
References
Bebchuk, L. A., & Fried, J. M. (2004). Pay Without Performance: The Unfulfilled Promise of Executive Compensation. Harvard University Press.
Berle, A. A., & Means, G. C. (1932). The Modern Corporation and Private Property. Macmillan.
Coffee, J. C. (2007). Gatekeepers: The Professions and Corporate Governance. Oxford University Press.
Clarke, T. (2007). International Corporate Governance: A Comparative Approach. Routledge.
Gilson, R. J. (2001). Globalizing Corporate Governance: Convergence, Resistance, and Practice. Columbia Law Review, 101(6), 1669-1699.
Hamid, N. A., & Al-Haj, T. (2011). Corporate Governance and Firm Performance: Evidence from Jordan. International Journal of Business and Social Science.
Hill, J. L. (2013). The New Governance: A Comparative Study of Corporate Governance Models. Cambridge University Press.
Khanna, V., & Palepu, K. (2000). The Future of Indian Capital Markets. Harvard Business Review.
Klapper, L. F., & Love, I. (2004). Corporate Governance, Investor Protection, and Performance in Emerging Markets. Journal of Corporate Finance, 10(5), 703-728.
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., &Vishny, R. W. (1998). Law and Finance. Journal of Political Economy, 106(6), 1113-1155.
Mallin, C. A. (2010). Corporate Governance. Oxford University Press.
Nair, A., & Bansal, N. (2015). Corporate Governance in India: Issues and Challenges. International Journal of Business Governance and Ethics.
Roe, M. J. (2003). Political Determinants of Corporate Governance: Political Context, Corporate Impact. Oxford University Press.
Shleifer, A., &Vishny, R. W. (1997). A Survey of Corporate Governance. Journal of Finance, 52(2), 737-783.
Spalding, A. A. (2008). Corporate Governance and Corporate Social Responsibility: A Comparative Analysis. Journal of Business Ethics, 80(2), 323-342.
Executive Performance and Rewards Survey Report. 2024.
“Culture and Corporate Governance Principles in India: Reconcilable Clashes?” IFC, 2023, www.ifc.org/en/insights-reports/2011/pso-23-culture-and-corporate-governance-principles-in-india-reconcilable-clashes.
Haan, Sarah. (2023) “Voting Rights in Corporate Governance: History and Political Economy.” The Harvard Law School Forum on Corporate Governance, corpgov.law.harvard.edu/2023/01/31/voting-rights-in-corporate-governance-history-and-political-economy/.
Lekatis, George. “Sarbanes-Oxley Act.” Sarbanes-Oxley-Act.com, 2024, sarbanes-oxley-act.com/. Accessed 20 Aug. 2024.
Mukherjee, Writankar. “Compensation Gap between CEO & Median Employee Widens in India Inc from Pre-Pandemic Years, Finds et Study.” The Economic Times,
www.pwc.in/press-releases/2024/50-of-indian-businesses-plan-to-prioritise-tax-transparency-in-esg-practices-pwc-india-survey.html. Accessed 20 Aug. 2024.
Sarkar, Jayati. “Board Independence & Corporate Governance in India: Recent Trends & Challenges Ahead.” Indian Journal of Industrial Relations, vol. 44, no. 4, 2009, pp. 576–592, www.jstor.org/stable/27768232. Accessed 20 Aug. 2024.
SEBI. “Securities and Exchange Board of India.” Sebi.gov.in, 2020, www.sebi.gov.in/. Accessed 20 Aug. 2024.
Shetty, Shaneen Parikh, Namita. “Protection and Redressal of Minority Shareholder Rights.” India Corporate Law, 6 Mar. 2023, corporate.cyrilamarchandblogs.com/2023/03/protection-and-redressal-of-minority-shareholder-rights/. Accessed 20 Aug. 2024.
Tonello, Matteo. “Shareholder Voting Trends (2018-2022).” The Harvard Law School Forum on Corporate Governance, 5 Nov. 2022, Corpgov.law.harvard.edu/2022/11/05/shareholder-voting-trends-2018-2022/. Accessed 20 Aug. 2024.
A. Shivani, "Corporate Governance: comparative study", IJNRD - International Journal Of Novel Research And Development (www.IJNRD.org), ISSN:2456- 4184, Vol.7, Issue 12, page no.a572-a586, December-2022, Available: https://ijnrd.org/papers/IJNRD2212079.pdf
Mehrotra, S. (2015). Corporate Board Structure in the United States and India: A Comparative View. Indian Journal of Corporate Governance, 8(2), 166-186. https://doi.org/10.1177/0974686215602388
Bhanotu, A study on Corporate Governance Practices in USA, UK & India - A comparative Analysis, Shodh Sanchar Bulletin Vol 10, Issue 40, Oct-Dec 2020, Page No 29-35, https://www.researchgate.net/publication/376191048