'Better corporate governance improves investment climate'

Improving the quality of corporate governance is important as it would help improving the investment climate in the country, says Shyam Sunder, professor of accounting, economics and finance, Yale University, US.

Talking to the reporters on 'Corporate governance and investment in India' at the Great Lakes Institute of Management (GLIM), he said that better quality of corporate governance would determine investments not only by foreign companies but by Indian companies in the corporate sector also.

Noting that corporate governance was not a new issue, he said that US was facing serious problems in the recent past and these had not been solved in spite of the Sarbanes-Oxley regulations.

The professor felt that Sarbanes-Oxley tried to solve problems that didn't exist and caused more troubles. It still has not addressed the existing problems in the US. He asked the companies to choose a system of corporate governance which is good for the industry.

He said that involving the shareholders was important in corporate governance.

Stating that accounting was also a major component in the system of corporate governance, Sunder said that corporates should do away with monopoly in accounting standards and should consider allowing alternative sets of accounting standards to compete with each other.

GLIM has set up Great Lakes Management Research Centre and Sunder is the honourary director. Yale University and the GLIM are working to start a research management programme soon, he said.