Comparative Study of Corporate Governance Guidelines in SAARC Countries

Abstract

To control the opportunistic behavior of a human being is a very difficult task. In agency theory, the principal delegates decision making to the agent. Delegating decision-making authority can lead to loss of efficiency and, consequently, increased costs. These costs are called agency costs. Sound corporate governance is essential to coordinate interests among all parties' relationship for sustainable development and growth of a company. The study is aimed at comparing corporate governance scenario in Bangladesh and three other countries and to identify the areas that need further improvement in order to ensure better governance, reliability, transparency, and accountability. This study is basically exploratory in nature. Strength areas of our corporate governance code are the specification of board size, restriction of no. of independent directorship, the shareholding of independent directors, and the quorum of the audit committee. But the major weakness areas are the non-specification of no. of committee act as member and Chairman by one person; lack of training of BOD; lack of evaluation of BOD, CEO and Independent directors; non-inclusion of employee participation, whistleblower policy, voting right, remuneration and Nomination Committee. These findings will help regulators in taking corrective actions for better performance and favorable treatment of all stakeholders.

Keywords: Corporate Governance, Board of Directors, SAARC, Agency Theory