Corporate Governance in Nepal Essay

The first look imbalance in the emerging markets private equity equation was the verity timeliness, and transpargonncy of financial and operating information provided to investors, and the willingness of managers to subject themselves to some stop of accountability to outdoorsrs. Even in the best of circumstances, relationships between investors and the managers of their portfolio companies be compound and often contentious, but the absence of sound corporate governance get along has sharply accentuated that tension. Nowhere does this issue become more(prenominal) problematic than with family form firms. Although widespread in all countries, family ownership tends to be even more prevalent in growing countries. The prototype is an entrepreneur who has built a successful business with virtually no capital or shareholders beyond his or her immediate family and close friends.Absent any accountability to outside shareholders, the interests of the owner and the firm are indisti nguishable, and financial accounts are frequently intermingled. These traditions of autonomy, secrecy, and emancipation run deep within the corporate culture of most developing country firms, rarely challenged until the need for outside capital becomes imperative. Few entrepreneurs, for example, have ever undergone an independent audit or adhered to international accounting standards that are the prerequisites for virtually every professional investor. The prospective investor is thus at the mercifulness of the entrepreneur for access to information necessary to make critical judgments somewhat company performance and value.The common practice, for example, of maintaining two or even triplet sets of accounting records in order to avoid the tax collector frustrates the imputable diligence teams task of gaining an accurate picture of performance. sable bookkeeping and disclosure habits also may impede access to other(a) important information that might alter investor perceptions of company value, such as environmental liabilities or unresolved legal disputes. As one investor noned, unitary big problem is skeletons in the closet. Many of these great companies have clandestine subsidiaries, offshore sales and other tax avoidance schemes. Nor is the lure of seriously needed capital likely to overcome resistance to outside investors who are inclined to push and prod management to make painful changes they intrust are needed to increase transparency and enhance company value. It is not surprising, there