Thread by @DNMukherjee

1/n Trying a thread on where I will be looking for the next #corporategovernance lapse in India after #ILFS #yesbank #NSE . What exactly to look for is as important as what not to look for

2/n Do not differentiate between promoter driven or professionally run organisation. Remember while #Ranbaxy was promoter driven #ILFS was professionally run

3/n do not get over cautious on real estate , infra - remember India’s major corporate governance lapses happened in ‘clean’ sectors such as IT, Financial services, pharma - the fallen angels came from holier than though segments

4/n So where to look for issue. If at least 3 of the below factors are present then look deeply
Factor 1: Superstar - almost Godlike - CEO; Usually over exposed to media; gets regular leadership awards. media persona is often a cover. CEOs appears in media only quarterly r safe

5/n Factor 2: Boards having superstar personalities but they are silent & you dont see a change is disclosure/ accounting quality after they joined. #NSE had vocal judicial and corporate bigshots so a board is not a guarantee unless then r seen flexing their muscles

5/n Factor 3: FII ownership is different but corporate stakeholders may not mean anything . Ex: #ILFS had #LIC in its boards

6/n Factor 4: The stock goes up but cashflows not increasing OR earnings keep on increasing ahead of industry yoy but there no rationale why such outstanding results

7/n Factor 5: Industry insiders are at a loss to explain the performance of this market darling superstar

8/n: Factor 6:Or the company comes up with a new new story on how they will make money

9/9 .If you see 3/4 of the above factors be very worried. Check cashflow- train yourself on earnings management- quality of reporting its maths not english- train yourself please