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Unit 9: Issues and Recent Trends in Corporate Reporting

in the organisation should be such that a sustained high level of management effort is Notes
promised.
Promotion of a High Level of Subunit Autonomy in Decision-making: Autonomy is the
degree of freedom a division manager can exercise in decisions making. If top management
favours a high degree of decentralization, this criterion is of particular importance.

Self Assessment

Fill in the blanks:
8. ……………….are the amounts charged by one segment of an organization for a product or
service that it supplies to another segment of the same organization.
9. ………………companies use transfer pricing to minimize their worldwide taxes, duties,
and tariffs.
10. …………….is the degree of freedom a division manager can exercise in decisions making.

9.4 Corporate Governance

Corporate governance denotes of voluntary ethical code of business and management of
companies. It aims to maximize the effectiveness and accountability of the brand of directors.
Corporate Governance deals with terms, procedure, practices and implicit rules that determine
a company’s ability to take managerial decisions to maximize long term shareholders value and
also to take care of all other shareholders in the enterprise. Cadbury Committee England and
CII in India has framed certain rules for desirable corporate governance. The Companies in
India now have started attempt to voluntary disclose the compliance of such codes.
Good corporate governance relates to systems of supervision and monitoring that maximise
long term shareholder value of a company, and also addresses the interests of all other stakeholders
in the enterprise. Although corporate governance varies across countries, there is a growing
consensus about the need for four key elements. These are:
Transparency: Transparency means a commitment that the business is managed along
transparent lines.
Fairness: Fairness to all stakeholders in the company, but especially to minority
shareholders.
Disclosure: Disclosure of all relevant financial and non-financial information in an easily
understood manner.
Supervision: Supervision of the company’s activities by a professionally competent and
independent board of directors.
Good corporate governance deals with building trust with customers, suppliers, creditors and
diverse investors-trust that the company will be manage properly, will successfully perpetuate
its businesses, will protect and enhance the capital of its investors, and will increase corporate
value for its shareholders.
Bajaj Auto has believed in these principles since its inception and has always discharged its
fiduciary obligations towards its shareholders. During the last two years, we have gone further
by steadily increasing the levels of disclosure in our annual reports-disclosures that go beyond
the statutes.
We have accelerated the trend this year. For instance, we have checked our corporate governance
performance against the code prepared by the Confederation of Indian Industry (CII, Desirable
Corporate Governance: A code, April 1988).

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