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One of the more famous expressions in the US Supreme Court is of Justice Potter Stewart, who, in his characterisation of pornography, wrote, “I know it when I see it”, to describe his threshold test for obscenity. One can say something similar about governance. Investors know which is a well governed company — they certainly know the badly governed ones.
Probe them regarding a wider set of companies and most will give an impressionistic answer — “A” is better governed than “B”, which is better governed than “C” — but falter to say that “C” is better governed than “A”.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
