The Hindu Business Line : Nothing much happens in a quarter: Damodaran

Is a quarter too short a period for companies to report when nothing significant would happen in such a short period? The SEBI Chairman, Mr M. Damodaran, personally feels that it is.

Responding to a query at a meet on Corporate Governance here on Saturday, Mr Damodaran said CEOs and CFOs live quarter-to-quarter, reminding one of the super-hit Hindi movie Qayamat Se Qayamat Tak.

He, however, insisted that this was his personal view and did not apply to the institute he represented.

Mr Damodaran was delivering the keynote address at the inaugural of a seminar on Corporate Governance in Emerging Markets held at the ISB.

Expectations on them to outperform quarter after quarter resulted in increased stress levels in CEOs and CFOs, Mr Damodaran said, quoting his friends in medical profession.

That the quarterly financial `engineering' (to show increased results over the previous quarter) adds to pressure needs to be discussed. Also if the usual four board meetings were confined to just a look into the accounts, would it be possible for them to effectively use the directors' time for chalking out long-term plans, he wondered.

Speaking on the evolution of Clause 49, he said a separate prescription for unlisted companies, too, was on the anvil.

Stating that a lot of attention needed to be given to the way boards were constituted, Mr Damodaran said it was important to choose the right kind of independent directors who could add value to the company.

He said even before the regulator came out with a prescriptive rule, companies need to constitute various boards such as an audit panel.

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