While corporate governance may not state the economic prospects of developing countries, itcertainly takes part in shaping

them. Good corporate governance is vital because of its role in attracting investors toinvest both in the domestic and in the international capital markets.Investors primarily consider two variables before making investment decisions in the companies the rate of returnon invested capital and the risk associated with the investment. Good corporate governance practices reduce this risk by ensuring transparency, accountability, and enforceability in the capital marketplace. As a result, the investorsexpect the Board and the Management in the companies to act in their best interests at all times so as to earn a risk adjusted rate of return that is higher than the cost of capital.Practices that the Board of Directors of a listed entity follows to fulfill the expectations of all stakeholders (i. e.Shareholders, employees, creditors, customers, government, regulatory authorities and society at large) is calledcorporate governance practices. While sound corporate governance practices ensure a companys long-term success,weak practices often lead to serious problems