Non-mandatory Recommendation under the CorporateGovernance Code in India: Influence and Impact

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Empirical research on the adoption and impact of corporate governance code in India is much popular. However, the research studies have been carried out in the period immediately following the adoption of the code of corporate governance in India. These studies are therefore unanimous in their conclusion that corporate governance is in a very nascent stage; and that it is too early to analyze and assess its impact. Secondly, most of the research work is carried out taking into consideration the large companies. This may be partly due to the recommendations by the Kumar Mangalam Birla Committee for a phased implementation of the corporate governance code, beginning with large companies. The various committees on the Code o Corporate Governance made recommendations dividing the same into two: mandatory and non-mandatory recommendation. In the first part, the paper makes an attempt to look at the adoption of the code of corporate governance by the mid-cap companies in India. And in the second part, the paper more importantly reviews the adoption of the non-mandatory recommendations, if any by these companies. The study concludes that there is a fair adoption of the code of corporate governance among the mid-cap companies in India. Further on, the adoption of the non-mandatory measures is found to additionally influence firm performance. These findings are in the shareholders interest and in favour of investor protection. The use of the postal ballot and the adoption of the whistle blower policy indicate the changing attitude of the Indian corporate sector.