Business Ethics and Corporate Governance, Second Edition

SERIES OF SCAMS THAT SHOOK INVESTOR CONFIDENCE

The vital need for corporate governance was first realized in the country with the ‘Big Bull’, Harshad Mehta’s securities scam that was uncovered in April 1992 involving a large number of banks and resulting in the stock market nosediving for the first time since the advent of reforms in 1991. This was followed by a sudden growth of cases in 1993 when transnational companies started consolidating their ownership by issuing equity allotments to their respective controlling groups at steep discounts to their market price. In this preferential allotment scam alone investors lost roughly INR 5,000 crore. The third scandal of the decade was the disappearance of the companies during 1993–94. Between July ...