Mumbai: Crisil Research said on Thursday said it has found corporate governance shortcomings in half of the companies it had evaluated for their initial public offerings (IPO) since May 2007.
Only 10% of the 29 companies assessed had robust corporate governance structures, and above average for 15%, Crisil Research said in a statement
“While not the sole determining factor, the quality of corporate governance as assessed by Crisil may significantly influence the Crisil IPO grade, beyond what the company’s business prospects and financials may suggest,” Chetan Majithia, head-equities, Crisil Research, said in the statement.
Crisil Research is an independent arm of credit ratings agency Crisil Ltd.
Boards in weakly governed companies had limited independence from the promoters, and there was higher propensity for related-party transactions in such firms, it added. In 45% of the companies with relatively weak governance scores, independent directors showed less-than-expected awareness about the company’s or the group’s businesses, Crisil Research said.