Good Corporate Governance Always Pays Off

Infosys among top three companies on IFC India scorecard despite recent controversies

- Vladislava Ryabota

Corporate governance principles do not follow a one-size-fits-all approach. That would elude the local contexts in which companies operate, which are key to understanding practices and behaviours as well as expectations of investors. This is important because each country’s legal framework is built on historical choices and subsequent developments. No system is better than any other. However, local and national specifics cannot ignore the trends of globalisation, the free and immediate flow of information, as well as the resulting access for investors and stakeholders. Events in one part of the world can have global consequences and impact any economy. Every time an economic crisis unfolds, investors learn to their expense that some companies they invested in did not follow good governance principles. Thus, investors realise that financial data alone cannot give the full picture to provide the comfort that the company not only talks the talk, but also walks it. Therefore, over the years, corporate governance has become a predominant topic in discussions related to investments, joint ventures and partnerships.

Companies worldwide recognise these changing trends and act on them. They recognise the opportunities that come with embracing good governance. For one, this allows them to attract more investors. But good governance also enables companies to gain reputation, which brings with it access to talent, new customers and public recognition.