ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Promoting Good Corporate Governance in India Through Institutional Investors' Activism: Concerns and Steps Forward

The Stewardship Code, 2019 came into effect on 1 July 2020. This is the third Code put in place to fortify the foundations of the stewardship responsibilities to be undertaken by different institutional investors in India. These responsibilities are off-shoots of the stakeholder theory introduced in the Companies Act, 2013. Much like the Indian Companies Act, the Stewardship Codes in India greatly emulate the essence of United Kingdom legislation. However, unlike the diffused shareholding pattern observed in the UK, Indian companies exhibit a concentrated shareholding pattern in the hands of the promoter group. Hence, a critical analysis is crucial to understand the impact of the implementation of these Codes in India on institutional investors’ activism. The authors are thankful to the anonymous reviewer for the valuable insights and comments on an earlier version of this article.

Stock Market Development in India

This paper addresses an important question of what happened to the Indian stock market following financial liberalisation. Considering three stock market indicators, viz, size, liquidity and volatility, and applying two time series trend break techniques of Perron on monthly data of Bombay Stock Exchange, it has been found that the Indian stock market grew and became more liquid after liberalisation. However, in respect of volatility the market had not exhibited any significant changes.

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