CORPORATE GOVERNANCE PRACTICES IN MOBILE TELECOMMUNICATION OPERATING COMPANIES OF BANGLADESH

Abstract

The past collapse of rather well functioning organizations such as Enron and WorldCom caused by the selfish act of fulfilling their own interest over the stakeholders has resulted in the much-needed attention on corporate governance best practices. The importance of good governance practices is ever more crucial because the world economy is interconnected with one another and the capitalistic structure of the market is putting more focus on profit maximization. Overemphasis on the profit motive can lead to ignoring the stakeholder side of the business. The stakeholders are the business participants whose best interest is essential to endure the future sustainability of any business. Short-term profit motive can lead to the ignorance of the importance of stakeholders which can be avoided by corporate governance best practices. In the given circumstance, this thesis focuses on analyzing the contemporary corporate governance practices in the mobile telecommunication industry of Bangladesh. In achieving the broad objective of this research, the current thesis aims to identify the state of current practices and highlight unique features of existing corporate governance practices in the mobile telecommunication sector of Bangladesh, present the perception on corporate governance practices held by different stakeholders, identify the difference in perceptions held by different stakeholders about the different aspects of corporate governance practices in the mobile telecommunication sector, address the major hindrances/barriers in practicing good corporate governance, and finally, suggest possible ways of strengthening corporate governance practices in the mobile telecommunication sector in Bangladesh. The study has applied a mixed method approach of combining qualitative and quantitative techniques to collect and analyze the data. The data has been collected in two phases; this multiphase process utilized questionnaire surveys and semi-structured as well as unstructured interviews for data collection. Later, corporate governance index has been constructed with data collected through two different sets of questionnaire surveys; this has been complemented with hypothesis testing of the collected data. Finally, these quantitative data have been complemented with qualitative data analysis of multiple interview accounts.

The study finds out that internal and external stakeholders agree on the somewhat satisfactory level of corporate governance performance in the mobile telecommunication industry of Bangladesh. However, when the facts collected through questionnaires has been analyzed, the situation changes to a great extent. One unique feature that is evident from this analysis is that publicly listed company always performs exemplary across the board while the lone state-owned company always remains at the bottom of the pack under all circumstances. In further analysis, with respect to hypothesis test, it has been found that the perception held by different stakeholders about the effectiveness of independent directors, management, and audit committee is significantly higher than that of overall corporate governance; on the other hand, the perception held by different stakeholders about the effectiveness of board of directors, reporting and disclosure, and ownership is significantly lower than that of overall corporate governance. The qualitative analysis highlights major areas of challenges such as governance deficiencies, lack of board training, lack of independence of subcommittees, flawed regulatory oversight and inadequate cyber security. Primarily, the regulatory authority is not being able to effectively implement policies which is constricting market competition and raising conflict between the companies and the regulators. The challenges discovered while conducting the qualitative analysis has led to the identification of some possible recommendations that can alleviate some of the governance issues faced by the mobile telecommunications industry of Bangladesh. The primary way of cultivating corporate governance best practices is through initiating stakeholder engagement with the company’s decision-making process. More importantly, immediate attention should be given to devise defensive strategies against cyber-security attacks. Finally, the regulatory authority must earn the industry’s trust in order to maintain a cohesive corporate governance environment in the industry. In order to represent the relationships mentioned so far, a conceptual model has been devised by extensive analysis of theoretical frameworks. The findings of this study can assist macro-level government authorities to strengthen their poor oversight over the industry and encourage a push towards a competitive marketplace. Moreover, the academic field can replicate this research so that the authors can justify the relevance and applicability of the findings at a macro-level, in other industries. This thesis makes a notable contribution in a multidisciplinary field of corporate governance, regulatory oversight, and stakeholder participation by extending the literary scope in developing economies.