With the recent stock market frauds inmarkets around the world such as the Madoff case in the U.S.and the recent Satyam fraud in India, no nation can hold itshead high and claim to have good corporate governance. Thereality is that the problems of fraud, faulty audits,misleading accounts, lack of transparency, conflicts ofinterest, criminal destruction of records and a long list ofother corporate governance violations, are not limited toemerging markets but are very much in evidence in developedmarkets as well. Given recent events then, the importance ofsound corporate governance is becoming increasinglyapparent. International organizations like the Organizationfor Economic Co-operation and Development (OECD), the WorldBank and the International Corporate Governance Network(ICGN), along with major fund managers, are formulating setsof codes and principles that can be applied globally. It isalso clear, however, that governments have generally done apoor job of policing the complex world of finance and thatthe greater part of the task will be left to self policingon the part of the participants. There is no doubt about it:sound corporate governance pays. Several studies undertakenby various organizations have shown that: there is a directrelationship between good corporate governance andinvestment returns. The oversight that comes fromtransparency and accountability creates a structure wherethe managers are discouraged from mismanaging the company,be it though a lack of diligence or care, improperdecision-making, or even intentioned unconscionable behavior.
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