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For a long time, governance was treated as the equivalent of  compliance. Something to be discussed when regulations changed, annual reports were being finalized, or a new investor came on board.

That era is over.

Today, governance has become a business issue. It affects valuation, access to capital, leadership credibility and, increasingly, the ability to attract long-term investors.

What is interesting is that most governance failures do not begin with any wrongdoing. They begin with exceptions.

A board that becomes overly dependent on the promoter. Related-party transactions that are considered “routine”. Decisions that bypass established processes because “everyone knows the context”. A board discussion that becomes shorter because the outcome appears “obvious”.

None of these decisions, in isolation, appear problematic. The risk emerges when they stop being exceptions and start becoming the norm.

Over the last few years, Indian markets have witnessed several situations where governance concerns have overshadowed financial performance. In some cases, the business remained strong, but investor confidence weakened because accountability structures appeared fragile.

What has changed is the way governance concerns are perceived. A decade ago, such issues were often viewed as matters for regulators and boards to address. Today, they influence investor discussions, lending decisions and even perceptions of leadership quality. Governance is no longer confined to the boardroom; it increasingly shapes how the market views the organisation itself.

Promoters often ask whether governance creates value. It is the wrong question.

The more relevant question is whether a business can continue to create value when trust begins to erode.

After all, governance is not merely about policies, committees or compliance requirements. Ultimately, it influences whether stakeholders trust not just the outcomes of decisions, but the process through which those decisions are made.

Ironically, some of the toughest tests of governance arise during periods of success rather than periods of stress. Strong growth, rising valuations and positive market sentiment can create a false sense of comfort. It is during such periods that discipline around oversight, challenge and accountability becomes most important.

Corporate governance is therefore no longer about satisfying regulators or meeting listing requirements.

In today’s environment, governance is not a layer added to a successful business.

It is one of the reasons a business remains successful.

Mahima Chopra