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5 Nat'l L.U. Delhi Stud. L.J. 111 (2018)
Ripple, If Not the Waves Effect: Analysing the Way(s) in Which Proxy Advisory Firms Can Affect Corporate Governance in India, in the Long Run

handle is hein.journals/nludslj5 and id is 125 raw text is: 


                                                                      Priya Garg*

 'Effective corporate governance' as a phrase has been trending in India. There have
 been a bucketful of reforms to encourage shareholders'participation, particularly that of
 minority shareholders, in improving companies' corporate governance. This certainly has
 and will continue to cast an impact on institutional investors (IIs) as minority shareholders.
 Additionally, the reforms aimed at improving the inflow ofForeign Institutional Investment
 in India should increase the role of Its as shareholders. Moreover, legal reforms have
 been, and are further proposed to be introduced to create a nudge-effect among Is in
 this direction. Against the backdrop of these developments, a new vacuum appears. For
 instance, the overriding factor of cost in the cost-benefit analysis of Is due to factors
 such as their dispersed shareholding, fear offree-riding by other minority shareholders
 in investee companies, existence of legal hurdles in their path of acting in cooperation
 with other Is, etc. may discourage their involvement. Amidst this scenario, intermediaries
 such as proxy advisory firms enter the Indian landscape. By enjoying the benefits of
 economies of scale, division of labour and specialisation in their research endeavours
 and other operational activities, these firms can reduce the cost element in the cost-benefit
 analysis ofIfs while they decide whether or not to participate in influencing their investee
 companies' corporate governance. There are other additional ways in which these firms
 can encourage shareholder-activism among Ifs and other minority shareholders. Such is
 the likely 'potential' of these firms in affecting India's corporate governance. The present
paper elaborates on these aspects. It also highlights if barriers exist against the firms'
materialisation of this 'potential'. This paper is thereby the first of its kind to analyse in
detail the SEBIRegulations regulating these firms and the role these firms can play, ifany,
in the 'long run' in improving India's corporate governance.

    The author is a final year student at the West Bengal National University of Juridical Sciences.
    The author would like to thank Ms Anuradha Ghosh, who taught her Corporate Governance &
    Corporate Social Responsibility at WBNUJS, for her valuable conments on the paper. The error,
    if any, solely remains the author's.

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