Stock governance is to be viewed from two angles. From the point of view of the company and that of the investor! To take care of the investor's sentiments is important for any company. The price of the share, to a great extent, depends upon the investor's confidence. The management guidelines are to be framed and important decisions need to be taken with the motto of welfare of the investor. The investor builds the organization and if the management breaks his confidence, the end-results will not be good. Any business thrives on the goodwill of the investors and customers. Without their confidence, the company will be moving on the slippery ground. Adverse reports on the performance of a company spread fast in the exchange, and the goodwill is lost with the speed of lightning!



Many investors, including retired military personnel, invest their life-time savings to purchase shares, with the hope to earn handsome returns. When the companies fail due to mismanagement, such people face the grim situation. The recent corporate scandals like Enron and World Com have shaken the confidence of the investors. The national exchequer lost about $ 80 billion. The main reason for this calamitous situation for the investors was due to poor governance of the company On the other hand, companies pursuing sound management principles had higher returns,

Stock governance is twice-blessed. It blesses the company that issues the shares, and blesses the investor who is willing invest in shares of such companies. The institutional investors look out for positive management practices. The enlightened management has concern for the social well-being of the people through environmental concerns. Steady profits are one of the hallmarks of good administration.

When you adopt certain ethical principles, it does not mean that economic issues are of no concern for the enlightened management. The two can combine very well to give good results. Good stock governance demands that your investor strategies should be as per the demand of the market conditions and at the same time, sustainable in the long run. The trustees that you appoint to look after investment related issues should be screened as for their capacity for clean corporate management. They should be fully seized of the issues like financial planning, risk management and allocation of resources. Adopt transparency as the fundamental principal of administration. The fact that you are willing to share all issues related to the welfare of the investors goes to strengthen their confidence. A confident investor is the best advertiser for the company.

Publicly traded companies have special responsibilities as for disclosure of information and they are bound by mandatory provisions for publishing financial reports, maintain the degree of transparency and issue disclaimers and suitable rejoinders for objections, if any, raised by the investors. Legally, the company belongs to the investors, and the company is under statutory obligations to furnish the information desired by the investor.

Now, let us consider the issue from the point of view of the investor. Broadly, there are two strategies to reap rewards (sometime punishments too!) from investment in shares. The first one is to buy and hold (known as Buffet's strategy). The second one is buy for resale. In the second option, your natural expectation is to sell for a better price than what you have purchased for.

A gold mine exists in the stock market, provided you understand and implement the rules of the game and play accordingly. If the investor invests with the gambler's instinct, such fickle mindedness will not fetch positive results in the long run. A well-managed company and the well-studied investor make a great combination and the profits will knock at the doors of both.