Corporate Governance and Foreign Ownership

Foreign Investment is the source of scare capital technology up gradation management expertise employment generation and new product market in every economy. For more than two decades it has played an important role in India to achieve a certain degree of financial stability growth and development in almost all sectors of the economy. Since 1991 there has beena drastic increase in Foreign Investment inflow in the country. Good governance practice firms are preferred by investors as it reduces their information acquisition and monitoring cost. Since 2000 a number of legal and regulatory reforms have been initiated by the Indian government to transform corporate governance framework and to improve the level of responsibility and accountability of insiders so as to safeguard the interests of investors especially minority shareholders and stakeholders adoption of independent board by companies and transparency. In particular the SEBI has introduced a corporate governance clause in the Listing Agreement (Clause 49) SEBI guidelines to address many issues in corporate governance.