Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation or company is directed, administered or controlled. An important theme of corporate governance is the nature and extent of accountability of particular individuals in the organization, and mechanisms that try to reduce or eliminate the principal-agent problem. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. In contemporary business corporations, the main external stakeholder groups are shareholders, debt holders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and other employees.

Corporate Governance has emerged as a response to many of corporate failures and widespread dissatisfaction about the functioning of the corporate sector. They are powerful system by which corporate bodies are directed and controlled. The Corporate Governance refers to relationship between Owners, Directors and Managers. Board of Directors is the Centre of Corporate Governance serves not only the company’s interest but also the society at large.

Distribution of Rights And Responsibilities among different participants-Board, Manager, Shareholders, Stakeholder It covers issues like- The legal issues of investors, The system of Electing the Board of Directors, The Composition of Board and its various Committees, System of Checks and balances, Ethics, Maximization of Owners wealth by Managers, The ability of the board to maintain Surveillance.

Corporate governance mechanisms differ as between banks. The governance mechanism of each bank is shaped by its political, economic and social history as also by its legal framework. Despite the differences in shareholder philosophies across all banks, good governance mechanisms need to be encouraged among all corporate and non-corporate entities. Key elements of good corporate governance principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization.

Both government and RBI need to bring about significant changes in the corporate governance mechanism adopted by banks and other financial intermediaries. As a matter of principle, RBI should not appoint its nominees on the boards of banks to avoid conflict of interests. Although it is not feasible to have a free market for take- over in respect banks there is a strong case for recognizing the rights of the shareholders, especially of public sector banks and financial institutions.

Today the common shareholders are denied such basic rights as adopting annual accounts or approving dividends. They cannot also influence composition of the boards in any way. As a part of strengthening the functioning of their boards, banks should appoint a risk management committee of the board in addition to the three other board committees viz. audit, remuneration and appointment committees. Since banks and institutions are highly leveraged entities their failure would pose large risks to the entire economic system. Their corporate governance mechanisms should, therefore, be relatively much tighter. Banks should have clear strategies for guiding their operations and establishing accountability for executing them. Banks also maintain high degree of transparency in regard to disclosure of information of importance principles of corporate governance is how directors and management develop a model of governance that aligns the values of the corporate participants and then evaluate this model periodically for its effectiveness. In particular, senior executives should conduct themselves honestly and ethically, especially concerning actual or apparent conflicts of interest, and disclosure in financial reports.

Defining terms

Corporate governance is about promoting corporate fairness, transparency and accountability. Yet a precise definition of what is a relatively new concept remains blurred. Some take a narrow view, seeing “governance” as a fancy term for the way in which directors and auditors handle their responsibilities towards shareholders. Others expand the concept to explain a firm’s relationship to society, often blurring the distinction between corporate governance and corporate social responsibility.

Definition from the OECD:

Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance.

Why is corporate governance important?

Corporate governance refers to the way that Boards oversee the running of a company by its managers, and how Board members are held accountable to shareowners and the company. This has implications for company behavior not only to shareowners but also to employees, customers, those financing the company, and other stakeholders, including the communities in which the business operates. Research shows that responsible management of environmental, social and governance issues creates a business ethos and environment that builds both a company’s integrity within society and the trust of its shareowners.

Good corporate governance helps an organization achieve several objectives and some of the more important ones include:

• Developing appropriate strategies that result in the achievement of stakeholder objectives

• Attracting, motivating and retaining talent

• Creating a secure and prosperous operating environment and improving operational performance

• Managing and mitigating risk and protecting and enhancing the company’s reputation.

Some aspects covered in the poll include:

• Corporate governance regulations in India

• Corporate governance concerns in India and role of independent directors and audit committees in addressing these concerns.

• Board practices, board oversight of risk management and the importance given to integrity and ethical values

• Practices that is fundamental to improved corporate governance.

REVIEW OF LITERATURE:

Dash Kumar Amarendra, 2012 “Media impact on corporate governance in India: a research agenda", Corporate Governance, Vol. 12 Issn: 1, pp.89 – 100, According to him the research on the impact of media on corporate governance is basically done in the context of Western media and democracy. There is no attempt to gauge the influence of media reports on corporate governance in India, although the largest democracy of the world has experienced the biggest scandals of unethical governance in the last two decades.

Agarwal. K. Anurag, 2012 “Corporate Governance: Confidentiality and Role of Media in Changing Times” In this legal and ethical issues are raised, particularly in the recent times when technology is changing at a rapid pace and also with stakes involved becoming higher and higher. With a written Constitution in India guaranteeing freedom of speech and expression to its citizens, including the media, it is a real test for the judiciary to achieve the right balance. Journalists are often protected by law not to disclose the identity of the confidential source, and this right – reporter’s privilege – at times seriously hinders the course of law. The paper examines these issues and discusses a couple of such cases. Further, it studies the role of media in India in the fast changing scenario, particularly in the light of the recent Supreme Court judgement – in Sahara v. SEBI case (September 11, 2012) – mandating self-regulation. The paper concludes that legal tools alone cannot bring the desired change and concerted effort needs to be made by the media, government and businesses for healthy and desirable dissemination of information.

OBJECTIVE:

Is to study the role of media in ensuring corporate governance in the present world and to study the, what is the power of media in ensuring media especially in India.

SCOPE OF THE STUDY:

The study deals with the role of media in ensuring corporate governance which is a vast subject. So the scope of the study mainly focus on guidelines of various areas like Media, Environment, Human Rights, Shareholders value, Case etc. What will be its impact on corporate governance?

METHODOLOGY:

The methodology adopted for this study is exploratory using the open-ended approach. These open ended questions are posed to media persons and other industry persons. The data collected by secondary data such as Articles, Journals books, magazines, corporate governance text book and data collected from official web sites.

Need For Corporate Governance In India

Post liberalization period (1993-1995) was a boom period, Capital through Public issues, Many Fake companies came in, which are now nowhere, Indian companies getting Global thus more transparency demanded by Foreign investors, Collaborators, buyers. Stories of Family owned business, Improving Ethical climate, Shadow Directors, Accounting Juggleries, Growing awareness towards Good Corporate Governance.

Corporate Advertising

Advertising in India is a big business, though small compared to US and Europe. The main lacuna is that there is no agency or a regulator to control advertising. Advertising is constantly bombarded by criticism. It is accused of encouraging materialism and consumption, of stereotyping, of driving us to purchase items for which we have no need, of taking advantage of children, of manipulating our behavior and generally contributing to the downfall of our social system.

If advertising employs different media and techniques, it itself is of several different kinds. There are commercial advertising, public service advertising and political advertising. Even assuming differences in advertising methods what follows is widely applicable.

What Role Can the Media Play in Corporate Governance in India?

Media role can be seen as key to creating awareness of Corporate Governance in business houses. Communication between Media and Corporate bodies directly and through efficient public relations or mass communications can be vital to ensure good governance and human rights. Media must be on the front line in disseminating impartial news for ensuring transparency in the corporate sector. Media have a watchdog role to ensure accountability and transparency of corporate sector. Media also need to improve their capacity to play the watchdog role.

Role of Media in pressuring corporate managers and directors to behave in ways that is socially acceptable. Sometimes this coincides with Shareholder’s value maximization. Media affects company’s policy toward the environment and the amount of corporate resources that are diverted to the sole advantage of controlling shareholders. In recent years hedge funds have emerged as among the most powerful players in corporate governance worldwide.

The role of the media is to collect, select, certify, and repackage information. In doing so they dramatically reduce the cost economic agents face to become informed. When the Wall Street Journal reports a table with the quarterly performance of mutual funds, for instance, an investor does not have to spend time dramatic reduction of the cost of collecting information is very important since, in many situations, collecting all the pieces of information herself, but she can glance at them in a second, for the price of a dollar plus the opportunity cost of the time spent reading. Furthermore, if there is a strong complementarily between news and entertainment, as is often the case for hot or titillating topics, the media can make the cost of absorbing information negative by packaging news appropriately. This individual agent face a rational ignorance paradox: the cost of becoming informed exceeds the benefit they can personally gain from that information. Hence, the media have the power to overcome the “rational ignorance” result. By doing so, the media increase the number of people who learn about the behavior of other people, thereby increasing the effect of reputation.

The media can play a role in corporate governance by affecting reputation in at least three ways.

First, media attention can drive politicians to introduce corporate law reforms or enforce corporate laws in the belief that inaction would hurt their future political careers or shame them in the eyes of public opinion, both at home and abroad.

Second, media attention could affect reputation through the standard channel that most economic models emphasize. In the traditional understanding of reputation managers’ wages in the future depend on shareholders’ and future employers’ beliefs about whether the managers will attend to their interests in those situations where they cannot be monitored. This concern about a monetary penalty can lead mangers not to take advantage of opportunities for self dealing so as to create a belief that they are good managers.

Third, and what we emphasize here, media attention affects not only managers’ and board members’ reputations in the eyes of shareholders and future employers, but media attention affects their reputation in the eyes of society at large.

Beneficial Effects of Advertising

· Information: Advertising aids in the education of general public; facilitates the exercise of free choice and free will and subsidies mass communication providing essential services to the public.

· Values and Life-Styles: Advertising contributes to the improvement in the standard of living, contribution to the sharing of comforts among the masses, and represents as essential factor in the economies of abundance.

· Creative Experience: Advertising adds new and interesting experience to life.

Adverse Effects of Advertising

· Deception: A deceptive advertisement is one in which a material untruth is told or hinted at. The use of a secondary meaning of a word is also considered as deceptive.

· Fear Appeals: It has been criticized. The intent of fear appeals is to create anxiety in the minds of the consumer and provoke him/her to make use of a particular product to alleviate the fear in him/her.

· Increasing Costs: Advertisements that provide information to consumers about the existence of certain products indirectly increase the final cost of a product. The ultimate burden of the cost is passed on to the consumer.

LIMITATIONS OF THE STUDY:

1) The main limitation of this study is that the media people will not provide any type the information.

2) Now a day’s every big company is coming with their own channel, newspapers, or any other type of media. So they are not ethical and won’t provide correct information.

FINDINGS:

1) Media are not ethical in collecting information.

2) Many of large companies coming up with their own media, which is benefiting their own companies.

3) Companies are having more number of channels and news channels.

4) Companies are not that much ethical because they are not providing proper information.

RECOMMENDATIONS/SUGGESTIONS:

1) A company does not have more no. of channels or news papers, which supports to their own companies.

2) Government should take necessary steps to make the companies follow ethically practices.

3) Government should take necessary steps when giving permission to media.

CONCLUSION:

The media can help shareholders or can hurt them. We conjecture that while the strength of the impact of the media depends on their credibility, the direction of their net effect depends on societal norms and values, but much more research is needed before coming to any definite conclusion on this matter. The only definite conclusion we can draw at this point is that the media are important in shaping corporate policy and should not be ignored in any analysis of a country’s corporate governance system. From a policy point of view our contribution provides both good and bad news. The important role of the media in affecting the functioning of government institutions, but the media plays an equally important role in shaping corporate policy. Our contribution is a first attempt to outline the theoretical channels through which this influence takes place and to show their practical relevance. We argued that the media selectively reduce the cost of acquiring and verifying information.

REFERENCES:

Agarwal. K. Anurag, 2012 “Corporate Governance: Confidentiality and Role of Media in Changing Times

Dr. Bhatt Singh Alka, Social Reporting in Corporate Governance and the role of Media in Corporate Governance.

Dash Kumar Amarendra, 2012 “Media impact on corporate governance in India: a research agenda", Corporate Governance, Vol. 12 ISSN: 1, pp.89 – 100

Fernando. A.C, Corporate governance

Klempner Geoffrey, Ethics and Advertising.

Picard.G.Robert, Corporate Governance of Media Companies.

The Corporate Governance Role of the Media: Evidence from Russia.

Zingales Luigi and Dyck Alexander, The Corporate Governance Role of the Media.

Received on 20.01.2014 Modified on 29.01.2014

Asian J. Management 5(2): April-June, 2014 page 155-158