Pratik Banerjee, SRM University, Delhi-NCR, Sonepat
Introduction
When we look back at the Corporation's history, we can easily identify three key developments. The first significant development could be said to be the creation of an artificial entity or identity for the corporation through legal sleight, the second being the introduction of the concept of limited liability and corporations' right to invest and hold stock in another corporation, and the third significant development being the shift from democratic to plutocratic voting rights, moving away from one vote per shareholder to one vote per share1.
'As a result of a range of difficulties, corporate governance has grown in relevance in recent years. While stakeholders can have an impact on an organization's forbearance and performance, their impact varies2. When a company's ownership and management are divided, a well-known principal-agent problem arises. The essence of the problem is how owners/investors can ensure that the hired professional managers run the company in the best interests of its owners or that they work as efficiently as possible, therefore maximising the firm's added value and the owners' welfare. As corporations have grown to produce more than 90% of global output, corporate governance has become increasingly important in recent decades.
