ROLE OF PROXY ADVISORY FIRMS IN STRENGTHENING CORPORATE GOVERNANCE

The need for corporate governance arises because of the market-related economy, which is prevalent in the current years. Corporate governance is essential and significant because of globalization. Corporate governance practices help in adding value to internal and external stakeholders comprising of company management, executives, Board of directors, employees, shareholders, debtors, creditors, suppliers, and customers. Corporate governance practices ensure that all stakeholders’ interest is safeguarded to ensure balanced and robust economic development. The scope of corporate governance practices is extensive and encompasses the need of the investors, institutions, and society. Corporate governance practices encourage an ethical, moral, and trustworthy environment. Principles of corporate governance practices focus on forward thinking on the prospects of the company, evaluation of current management performance, creation of long-term shareholder value, evaluate risks, valuations, financial and operational planning, and growth of the company. Proxy Advisory Firms are independent analysts providing advisory services to investors and recommending to them the effect of their vote in their shareholding and other corporate decisions. Proxy advisory firms basically safeguard the shareholders' rights which lead to good corporate governance. They advise institutional investors on how to vote on the thousands of shareholder resolutions that arise every year. Thus, they are expected to act as catalyst in strengthening corporate governance. This paper involves in studying the role of proxy advisors in strengthening corporate governance.