Corporate Governance in Indian Corporate Sector
(A CASE STUDY OF LISTED COMPANIES OF INDIA)
Corporate ownership structure has been considered as having a strongest influence on systems of corporate governance, although many other factors affect corporate governance, including legal systems, cultural and religious traditions, political environments and economic events. All business enterprises need funding in order to grow, and it is the ways in which companies are financed which determines their ownership structures. It became clear centuries ago those individual entrepreneurs and their families could not provide the finance necessary to undertake developments required to fuel economic and industrial growth. The sale of company shares in order to raise the necessary capital was an innovation that has proved a cornerstone in the development of economists worldwide. However, the road towards the type of stock market seen in the UK and US today has been long and complicated. Listed companies in their present form originate from the earliest form of corporate entity, namely the sole trader. From the middle ages, such traders were regulated by merchant guilds, which over saw a diversity of trades. The internationalization of trade, with traders venturing overseas, led gradually to regulated companies arising from the medieval guild system. Members of these early companies could trade their own shares in the company, which lead ultimately to the formation of the joint stock companies.