Small group of industrialists control 66% mkt cap of NSE companies

AHMEDABAD: A study conducted by two IIMs says that a small group of "highly boarded directors" (directors who are on the boards of five or more companies) controls 66 per cent of the total market capitalisation of NSE-listed companies, as of 2010.

This raises concerns about the efficacy of the recently introduced corporate governance norms, which are aimed at increasing the diversity in the director pool, it says.

The study -- 'Coping with Corporate Cholesterol, Board Interlocks and their Impact on Corporate Governance - The Indian Experience' -- was conducted by IIM Ahmedabad Director Dr Samir Barua, along with a visiting professor and two other assistant professors of IIM Bangalore.

Such concentration of economic power in the hands of a few is not desirable in the larger interest of society, the researchers concluded.

"A small group of highly boarded directors seems to be in control of 66 per cent of the total market capitalisation of NSE-listed companies," said IIM-B Assistant Professor Suresh Bhagavatula, a co-author of the study.