New Delhi: Listed companies need to ensure good corporate governance standards as they cannot afford any wrong doing amid increased investor awareness and strict disclosure requirements, industry body Assocham said today.
"Indian stock market is showing an increasing tendency for zero tolerance towards any perceived dishonesty on the part of companies, expecting them to remain fully transparent and compliant in corporate governance and has severely punished the companies faltering on transparency," Assocham said.
It also cautioned promoters to remain committed to enhancing shareholders' value.
"Gone are the days when a firm or its promoters could get away with practices which do not follow the best of standards. Thanks to increasing awareness among the investors and strict disclosure norms, one cannot afford any wrong doing knowing or unknowingly," the chamber said.
Assocham cited the backdrop of a few recent examples where share prices of some companies witnessed wild fluctuations and erosion in wealth on the suspicions of unfair transactions.
It noted that while a lot has been done in the area of corporate governance "still a lot more is needed".
The industry body said the pre-dominance of foreign portfolio investors and large number of domestic mutual funds with enough clout in the market has also led to a situation where the punishment for any act, which even appears to be wrong, can be severe in terms of wealth erosion.
"So, the companies listed in the stock market have to be extra careful in ensuring that the corporate governance standards are in line with the best international practices," said Assocham Secretary General D S Rawat.
Besides, he said, credit must also be given to the regulator, Sebi (Securities and Exchange Board of India), for ensuring that the companies are made to provide all material disclosures which have a bearing on the stock prices.
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