Assessment of corporate bodies in the light of corporate governance rating

corporate governance ratingAssessing the grading and rating system in any corporation is important for the management and the stakeholders, and the more efficient they are the easier it becomes to plan future trajectories. SRM University-AP is happy to announce that Dr Lakshman Rao Ayyagari, Assistant Professor of Commerce has researched extensively on this issue and published a paper titled, “The ignored tool “corporate governance rating”: An overview of the corporate world in the emerging market” in “Journal of Governance and Regulation.

According to Dr Ayyagari, this research work is like a grading pattern, we adopt to rate and rank various organizations on various parameters, accordingly “Corporate Governance Rating” is a tool to assess firms’ performance, but not widely used in assessment, recommended for its use, keeping in mind the interests of various stakeholders.

About the research:

The interest of the Stakeholders is to see the growth of their entities, also they benchmark their entities through business performance metrics or tools like Return on Equity, Return on Assets, Earnings Per Share, Gross Profit Margin, Employee Productivity, Sales Turnover, ratings given by prominent credit rating agencies such as ICRA, CRISIL, Standard and Poor etc. In addition to this, internal governance mechanisms, board of directors’ characteristics, their independence, transparency, concentration, and presence of employees in the ownership structure also influence financial and stock market performance. However, assessing the performance of entities through some of these limited angles is not always possible. One more criterion for assessing the performance of entities is “Corporate Governance Rating”. However, it is not widely used as a tool to assess a firm’s performance in the emerging markets. The present research paper is intended to address the scenario of Corporate Governance Rating in the Corporate World to assess a firm’s performance. With the help of majorly secondary sources of data conducted a study from 2003 to 2021 based on the CRISIL’s rating pattern. The findings showed the significance of Corporate Governance Rating for its adoption and future research in the development of rating mechanisms in India as well as in emerging markets.

This research can be recommended to regulatory bodies especially in India like SEBI for conducting thorough research in this area for a policy study and implementation.

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