Volume 04 July 2015 Number 01

Is Interactivity A Major Consideration for Dr. B. Janarthanan

Facebook Pages?: Evidence From Who Facebook Page Dr. Shailesh Rastogi
Dr. M. Jeevananthan
Online Food Ordering - Serving Food Conveniently Dr. Himani Sharma
Amanpreet Kang

Forms of Online Financial Reporting of Prof. Pramod Kumar

Selected Indian and U.S. Banks Meenakshi Chawla
Presence of Seasonality in Stock Market: Himani Arya
A Reference from India and Us Dr. Dinesh K. Sharma
A Case of Establishing Brand: Faridabad Heena Dr. Bindu Agrawal

Grievance Handling in Ranbaxy: A Case Study Dr. Kanchan Bhatia

Dr. Shweta Mittal
The Influence of Consumers Past use Experience on Dr. Naval Bajpai
Consumer Attitude: A Comparative Study between Dr. Utkal Khandelwal
Metro and Nonmetro City Dr. Amit Khandelwal

Corporate Governance: Is it An Effective Panacea Dr. Ankit Saxena

for Ensuring Corporate Ethics? Prof. Anand Mohan Agrawal

Recognised by UGC Under Section 2(f)

 Prof. D.S. Chauhan, Vice-Chancellor, GLA University

Prof. Anand Mohan Agrawal

Executive Editor
Dr. Ankit Saxena

Keeping an eye on Kaleidoscopic range of issues influencing the business management and administration
Prastuti - Journal of Management and Research forays into the realm of advances and amelioration being made
in the field of management practices and studies. It provides a podium for the dissemination and
experimentation for practices and policies of the business management and administration. Prastuti (ISSN
2320-2262) is published biannually in January & July by the Institute of Business Management, GLA University,
Mathura.
GLA University of PRASTUTI, Journal of Management & Research assumes no responsibility for the views
expressed or information furnished by the authors.
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EDITOR-IN-CHIEF, PRASTUTI, Journal of Management & Research, Institute of Business Management, GLA
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Vol. 04 - No. 01 © 2015 Institute of Business Management, GLA University, Mathura

 Editor’s Preface
The world economic spectrum has gone under remarkable transformation in last few months in all
aspects. The world economy is in the progression of resurgence, combating the several issues like
international terrorism and inter-continental political issues. In India, we witnessed a mixed economic
surge. There have been numerous growth driven initiatives and reforms, however the desired outcome is
yet awaited. With all around focus on industrial growth and equally supported by efforts at not only at
macro but also at micro level from each and every player of the game.

Coming to the current issue of this journal, I am pleased to inform that, we have published eight
quality publications spreading different functional areas of Management domain. The papers have
approached to various domains of business as well as economy.

Janarthanan et. al. in their contribution entitled “Is interactivity a major consideration for
Facebook pages? Evidence from WHO Facebook page” have derived that using health promotion through
social media is one of the most impressive strategies that promoters follow. Examining a Facebook page
for promoting health in the aspect of user’s attention (number of likes), involvement (number of
comments) and virality/word of mouth (number of shares) is more important for the health promoters.
The study explores the ‘WHO’ Facebook page and gives suggestion to improve their attention,
involvement and virality with respect to interactivity and category of the posts.

Sharma and Kang in another exploratory case article viz. “Online Food Ordering – Serving Food
Conveniently” have truly highlighted that we are living in the world where time and effort are two biggest
factors in life; the same applies for food also. Now-a-days people are getting inclined to foods from the
restaurants rather than homemade foods in order to save time and effort. This case study discusses about
the online food ordering industry in India, five prominent players in the industry and the business models
used by them.

Kuman and Chawla in their research work on “Forms of Online Financial Reporting of selected
Indian and U.S. Banks” derive that the development of the Internet as a global and excited medium for
dissemination of financial information creates a new reporting environment. World Wide Web (WWW)
technologies are extensively used for disseminating financial information around the world. HTML and
PDF are the oldest form of disseminating financial information on the websites but XBRL is the new form
of reporting financial information on the websites. From 2010 onwards SEC mandate, banks are required
to tag their face financial statements through XBRL. Banks are required to tag its financial statement
footnotes and financial statement schedules.

Arya and Sharma in their empirical research work exploring “Presence of Seasonality in Stock
Market: a reference from India and US” comprehend that seasonality is periodical and repetitive change in
a time series data. It is present in many fields such as production, sales and asset market. Although
researchers do not agree on the existence of seasonality, supporters of Efficient Market Hypothesis negate
seasonality. This research paper analyses Indian and US stock market to validate the existence of any
seasonality persistence in any day of the week or any month of the year interval.

Agrawal in a case study on “A Case of Establishing Brand: Faridabad Heena” talks about the
journey of Faridabad Heena to be established as retail brand in Faridabad region. Faridabad Heena is
struggling with the tuff market competition at national level. This case is a real example of how a second
generation entrepreneur thought of branding its normal product and taking it to the heights of established
retail brand. This case also highlights that most of the times, entering a new international markets is not a
subject of preference but of necessity to remain competitive in new or established markets.

Bhatia & Mittal in a case study entitled “Grievance Handling in Ranbaxy: A Case Study” have
underlined that the maintenance of quality work-life is the biggest challenge for any organization today.
Broadly, a grievance can be defined as any discontent of dissatisfaction related to organizational matters.
It can be real or imaginary, rated or unvoiced, written or oral. Every organization strives to establish an
excellent working environment. This would further facilitate increased employee morale and a better
performance and thus help an organization to achieve its goals.

Bajpai et. al. in their a empirical research entitled “The Influence of Consumers Past Use
Experience on Consumer Attitude: A Comparative Study Between Metro And Non-metro City” attempt
to measure the impact of consumer’s past use experience on attitude formation along with a comparative
study between metro and non metro cities consumers in India. Study identified eight different
antecedents of consumer past use experience through literature and then developed a simple model of
consumer past use experience for the study. The result revealed that consumer past use experience in
formation of positive consumer attitude found high in metro city as compare to non-metro city.

Saxena and Agrawal in their thought provoking article on “Corporate Governance: Is it an

Effective Panacea for ensuring Corporate Ethics?” with the help of various scholarly works in recent past,
it has been derived that good corporate governance, adds to competitive advantage, leads to high firm
value and fair pricing of shares, yields positive market price reaction. Fundamental shortcomings of
corporate governance framework revolve around implications in real implementation, lack of quality
corporate governance practices, problem of dominant shareholders, Distortion in Managerial pay-offs,
Divergence from prescribed code, and even Hurting the overall economic growth. Some of the
imperatives for strengthening corporate governance framework, obtaining optimum level of
transparency, reducing information asymmetry, enhancing role of media, and controlling managerial
distortion resulting from stringent regulation.

I take this opportunity to invite all the professionals, researchers and academicians to send their
conceptual or empirical papers, case studies and book reviews for publishing in this journal. Finally, I
thank all the reviewers for their time and valuable suggestions and also congratulate all the contributors
for their research.

Anand Mohan Agrawal

Editor-in-Chief
Prastuti
 Contents

1. Is Interactivity A Major Consideration for Facebook Pages?:

Evidence from Who Facebook Page 01-07
Dr. B. Janarthanan, Dr. Shailesh Rastogi, Dr. M Jeevananthan

2. Online Food Ordering - Serving Food Conveniently 08-14

Dr. Himani Sharma, Amanpreet Kang

3. Forms of Online Financial Reporting of Selected Indian and U.S. Banks 15-23
Prof. Pramod Kumar, Meenakshi Chawla

4. Presence of Seasonality in Stock Market: A Reference from India and Us 24-31

Himani Arya, Dr. Dinesh K Sharma

5. A Case of Establishing Brand: Faridabad Heena 32-34

Dr. Bindu Agrawal

6. Grievance Handling in Ranbaxy: A Case Study 35-39

Dr. Kanchan Bhatia, Dr. Shweta Mittal

7. The Influence of Consumers Past use Experience on

Consumer Attitude: A Comparative Study between
Metro and Nonmetro City 40-51
Dr. Naval Bajpai, Dr. Utkal Khandelwal, Dr. Amit Khandelwal

8. Corporate Governance: Is it an Effective Panacea for

Ensuring Corporate Ethics? 52-60
Dr. Ankit Saxena, Prof. Anand Mohan Agrawal
Is Interactivity a Major Consideration
for Facebook Pages?
Evidence from WHO Facebook page
Dr. B. Janarthanan*
Dr. Shailesh Rastogi*
Dr. M Jeevananthan*

Abstract
The use of social media for health promotion is an impressive and interesting approach to disseminating health information and providing
health support. Facebook, for example, is well known for its user networking and interactivity and can serve as a promising platform for health
promotion. The Facebook user’s health consciousness and status can be understood by examining his/her attention (number of likes), involvement
(number of comments) and virality/word of mouth (number of shares) and can be utilized by health promoters. The present study explores the ‘WHO’
Facebook page and provides suggestions to improve the user’s attention, involvement and virality with respect to interactivity and category of posts.
For this purpose, a sample of 264 posts in a predetermined time frame was collected and analysed. The results suggest that the virality has a greater
influence on the interactive feature than attention and involvement. The results also imply that attention, involvement and virality differ respective to
the category and interactivity of the posts.

Keywords: E-health promotions, Facebook, WHO, Interactivity, Likes, Comments and Shares.

Introduction functionalities, viz. presence, sharing, conversations,

Since the inception of e-health, the Internet has become
a strategic partner of health promotion because of the
possibility of reaching a wider audience (Mimi et al,
2008). E-health uses Internet technology and electronic
communication to support the delivery and
management of health care services (Nazi, 2003; Oh et
al, 2005). In the same vein, social media is perceived as
an active partner to promote healthcare activities.
Kaplan and Haenlein (2010, p.61) define social media as
“a group of internet based applications that build on the
ideological and technological foundations of Web 2.0,
that allows the creation and exchange of User Generated
Content”. The reach and interactive features in social
media opens a wide window of opportunity for health
promoters to use it as an effective medium for
dissemination of information. With seven
relationships, reputation, groups, and identity
(Kietzmann et al, 2011), social media has significant
potential in promoting a healthy environment among
the world population. Websites like Facebook, Twitter,
etc, enable user interaction in health promotion and
increase the visibility of the shared message. Facebook,
in particular, enhances this activity by offering separate
pages to health promoters, which enable them to
disseminate health services and information through
various promotional strategies.
The current study discusses the interactive features of
the health promotion offered in the Facebook page of
the World Health Organization (‘WHO’).

*Faculty, Thiagarajar School of Management, Madurai

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 Prastuti: Vol. 4, No. 1, July 2015
Health promotion in Facebook
Social media is a very exciting development in the history
of communication technology. The emergence of
Facebook, in particular, has facilitated interaction among
users to share opinion and information. Facebook is
famously known as a public profile that enables you to
share your business and products with its domain users.
The extensive proliferation of Facebook has resulted in its
increasing use as a promotional platform, including that
for healthcare promotion. Social media has eased the
work of health promoters by allowing identification and
interaction with the audience (Thackarey et al, 2008). Its
interactive features make it an effective medium to reach
the audience better. (Kreps and Neuhauser, 2010; Schein,
2011). Besides the reach, health pages in Facebook are
unique in that they provide high interactivity to users
through features such as sharing of videos and photos,
contesting polls, campaigns and other interactive posts.
Mixing various interactive threads in a single post allows
users to like, comment and share posts effectively.
Perhaps most importantly, Facebook has become an
active entity among various socio-demographic groups.
All these features associated with Facebook make it well
suited for health promotion.
A number of health oriented pages are available in
Facebook, but health.com, health digest, and World
Health Organization (‘WHO’) are the top three active
pages with 1,917,188, 1,257,889, and 740,504 followers
respectively as on May 1st of 2014. Facebook pages of
‘Health.com’ and ‘Health digest’ focus on disseminating
valuable health, food and lifestyle related facts. Unlike
other Facebook pages, ‘WHO’ has a high level of social
engagement in which almost all the comments boasting
positive emotions. In the first 100 posts examined in these
Facebook pages from January, 2014 to April, 2014, it is
seen that ‘Health.com’ posts include sharing health tips
(20), fitness (26), healthy food and drink (27), beauty and
lifestyle (26), and societal (1) while ‘health digest’ shares
health tips (20), fitness (5), healthy food and drink (37),
beauty and lifestyle (9), smoking (2), brain teasers (6),
motivation and other (15), and environment (6). The
‘WHO’ page in Facebook on the other hand, is oriented
towards health, environment, safety, social, and
information. ‘WHO’ has sorted its posts into 30 categories
from 1948 to 2010 and has received a total of 1521 likes
(n=30, m=50.7, s = 32.62) and had 62 comments with (53
02
positive, 8 neutral and 1 negative comment). Among the
30 categories, “polio” (n=4, m=63.5) has received
considerable attention in the ‘WHO’ Facebook page.
Since the start of its Facebook presence in 2010, there has
been an increasing trend in sharing ‘WHO’ posts with 24
shares in 2010 (base year), 81 in 2011 (YoY% +337.5), 145
in 2012 (YoY% +179.01), 153 in 2013 (YoY% 105.5) and 115
in 2014 (until April 30).
The ‘WHO’ page shares a wide range of posts that
includes health information, campaign, photo, videos,
quiz and surveys from different countries in the world.
With ‘WHO’ being an active participant in world health
promotion, its Facebook page has facilitated its
promotional initiatives and health visibility. While
‘WHO’’s work is indeed commendable, research on
member response to the various posts by ‘WHO’ will help
in improving its Facebook reach and presence.
Promotional research in social media has become an
important field of study in recent years. Such research
seeks to understand the effectiveness, interactiveness
and share value of social media as a vehicle for
promotions. A health promotional Facebook page
typically publishes posts involving different interaction
levels. It has been identified by earlier researchers that a
post commonly comprises of three levels of interaction.
(Coyle and Thorson, 2001; Fortin and Dholakia, 2005): low
for pictorial posts, medium for event posts and high for
video posts (Vries et al, 2012). Recognizing the level of
interaction with which the user responds better is
important to know the effectiveness of the post. The
reach of a post can be measured using three attributes,
viz. ‘number of likes’, ‘number of comments’ and ‘number
of shares’. Strategically, the likes, comments and shares
represent attention, engagement/involvement and word
of mouth that a user feels towards a post, respectively.
This study aims to understand the relationship between
interactive level and attention, engagement and virality.
The interactive level in Facebook pages can be
categorized into low, medium and high. From an overview
of Vries et al (2002) and the panel observation on ‘WHO’
posts, the detailed structure of interactivity and their
conceptual framework are shown in Figure 1. The primary
research questions can thus be framed as follows:
RQ1: How can the posts of ‘WHO’ is enhanced to receive
more attention (likes), engagement (comments) and
virality (shares)?
 Is Interactivity a Major Consideration for Facebook Pages? Evidence from WHO Facebook page
RQ2: Do the attention (likes), engagement (comments)
and virality (shares) differ respective to interactivity level
and category of the posts?
Low
(Status, Photo)
Medium
(Quiz, Campaign)
High
(Video)
Interactive levels
Figure 1: Conceptual framework of the study
Methods
To best answer the proposed research questions, a
content analysis was conducted on the ‘WHO’ Facebook
page. Content analysis provides both qualitative and
quantitative insights with respect to the research
objectives. This research uses quantitative content
analysis to answer the research questions. A sample of
264 posts collected from January 2013 to April, 2014 was
used for analysis. These posts were further analyzed to
examine specific aspects of the proposed research
question. The posts were recorded in an excel sheet
incorporating the following attributes; category of the
posts, number of likes, number of comments, number of
shares, three stage interactive level, key purpose of posts
and country discussed on the post. The number of likes,
Attention
(Number of Likes)
Engagement
(Number of Shares)
WOM or Virality
(Number of Shares)
Measurement criteria adopted for
WHO posts
comments and shares in the posts are considered as the
target variables for the research study. After three levels
of examination, the posts were segmented into nine
groups; campaign (10), information (67), photos (40),
questions (10), quiz (1), status (119), survey (4), video (9),
vote (1). The interactive levels were coded in binary
values as 1 for the level and 0 for baseline. The purpose of
the posts was also recorded respective to the content of
the posts.
To answer the RQ1, a detailed descriptive examination on
the posts was performed. Further, as suggested in the
conceptual framework, the relationship between
interactivity levels and the measurement components
were measured using non-linear quadratic, cubic,
exponential regression models. Since, the predictor
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 Prastuti: Vol. 4, No. 1, July 2015

variables were measured in binary coding system, the between subject effects of the interactive level for likes,
above mentioned regression models help in standardizing comments and shares; using ‘category of the posts’ as
the results. In the case of RQ2, multivariate analysis of covariates.
covariance (MANCOVA) was conducted to know the

Table 1: Descriptive statistics for the posts examined

Purpose of the posts
Likes Comments Shares
Mean Std.Dev Mean Std.Dev Mean Std.Dev
Health 708.52 574.6 26.68 31.57 320.16 477.01
Environment 477.53 181.3 16.92 22.30 81.96 59.57
Safety 591.22 526.7 29.33 27.28 352.11 564.30
Sanitation and Hygiene 804.40 399.2 20.20 10.54 467.00 594.33
Other WHO status 689.28 495.6 28.96 25.78 156.37 143.73

Category of the posts

Likes Comments Shares
Mean Std.Dev Mean Std.Dev Mean Std.Dev
Campaign posts 415.10 180.09 14.00 9.24 254.2 204.04
Information posts 699.70 571.67 23.95 20.36 496.23 698.37
Photo posts 765.58 514.58 20.57 15.47 159.35 139.09
Question posts 745.80 688.61 68.80 90.60 197.00 203.53
Quiz posts* 198.00 - 29.00 - 149.00
Status posts 699.39 524.17 27.54 27.00 197.65 229.76
Survey posts 183.00 83.88 13.00 8.04 25.25 28.5
Video posts 373.00 142.54 14.88 6.37 141.88 80.57
Vote posts* 232.00 - 54.00 - 53.00 -

Total 670.29 529.6 25.80 29.15 265.26 416.10

*n=1

Results
Of the 264 posts collected; 168 posts are health oriented
posts, the others include safety (9), environment (28),
sanitation and hygiene (5) and ‘WHO’ updates and status
(54) of the remaining 96 posts. Considering the category
of the posts, photo posts are found to have high mean
likes, question posts have high mean comments and
informational posts have high mean shares compared to
other categories. 49 countries are represented in the
examined 264 posts. Philippines (23), Guinea (10),
Eastern Mediterranean (5), India (5), Syria (5), Brazil (4),
South Sudan (4), Indonesia (3), Africa (2), Australia (2),
Cebu (2), China (2), Mexico (2), Nepal (2), Russia (2), and
Vietnam (2) feature more than once in these posts. Posts
associated with India (n=4, mean likes = 1597.40, mean
comments = 65.20, mean shares = 668.60) appear to be
popular. The detailed descriptive results of the collected
posts are given on Table 2.
The non linear regression estimation results are
presented in Table 3. The effects of the interactive level on
‘WHO’ Facebook posts target variables, viz. number of
likes, comments and shares are different. Low (H1a) and
medium (H1b) interactive levels have significant influence

04
 Is Interactivity a Major Consideration for Facebook Pages? Evidence from WHO Facebook page

on the target variable; ‘number of likes’ (in quadratic and
cubic models), whereas ‘number of shares’ show
significant relationship towards medium (H3b) and high
(H3c) interactive levels (in quadratic, cubic and
exponential models). H1c: high interactive level towards
number of likes and H1a: low interactive level towards
number of shares shows an insignificant model and the
hypothesis is not supported. The model for ‘number of
comments’ representing the hypotheses; H2a, H2b, H2c
are not significant with any of the interactive levels.

Table 2: Non linear regression functions for likes, comments

and shares associated with interactive level
Likes
Variables Quadratic model Cubic model Exponential model
Std. Co-eff t-value Std. Co-eff t-value Std. Co-eff t-value
ns
Low -0.139 -2.267 -0.139 -2.267 -0.099 -1.603
ns
Medium 0.501 2.128 0.219 2.128 0.080 1.296
ns ns ns
High -0.033 -0.530 -0.033 -0.530 -0.012 -0.194

Comments
Variables Quadratic model Cubic model Exponential model
Std. Co-eff t-value Std. Co-eff t-value Std. Co-eff t-value
ns ns ns
Low -0.042 -0.684 -0.042 -0.684 -0.066 -1.078
ns ns ns
Medium 0.130 0.543 0.057 0.543 -0.005 -0.74
ns ns ns
High 0.022 0.354 0.022 0.354 0.058 0.936

Shares
Variables Quadratic model Cubic model Exponential model
Std. Co-eff t-value Std. Co-eff t-value Std. Co-eff t-value
Low -0.059 -0.958 -0.059 -0.958 -0.027 0.979
Medium 0.943 4.044* 0.413 4.044* -1.22 -1.981**
High 0.134 2.177** 0.134 2.177** 0.175 2.859*

Sig: ns: not significant; **0.05; *0.005

The between subject effects using MANCOVA shows that
the ‘number of likes’, ‘number of comments’, and
‘number of shares’ significantly differs with the
interactive level (Wilks’ Lamda = 0.911, f =8.410, sig <
0.005, observed power = 0.993) and category of the posts
(Wilks’ Lamda = 0.929, f =3.223, sig < 0.005, observed
power = 0.928). The differences in the effects of the
subject indicate that ‘number of shares’ (f=16.57,
sig<0.005, observed power = 0.982) significantly differs
respective to the interactive level of the posts. The
‘number of likes’ (f=2.97, sig<0.10, observed power =
0.575) and ‘number of shares’ (f=2.94, sig<0.10, observed
power = 0.569) showed a moderate power with respect to
the category of the posts.
Managerial Implications
The present research aims to provide empirical
suggestions to promote the ‘WHO’ Facebook page. For
this purpose, the interactive level, category, purpose and
country details were empirically examined. Our study
results can be augmented through exploring and
understanding how the ‘number of likes, comments and
shares’ can be increased. In a broad sense, it is

05
 Prastuti: Vol. 4, No. 1, July 2015
understandable that the variables ‘number of likes’ and
‘number of comments’ refer to the attention and
involvement of the post viewer respectively. More
importantly, it can be perceived that ‘number of shares’
can be directly linked to viral communication in social
media. The above rationale is used in formulating the
results and suggestions in improving the ‘WHO’ Facebook
page.
Discussion to improve the attention (likes)
“Likes” are an effective tool to draw the attention of the
users/viewers towards a particular Facebook post or
comment. A user may like a post for various reasons
associated towards it. This research studied the
importance of interactive level and its impact on user
likes. ‘WHO’ customizes posts in eight categories;
campaign, information, photos, questions, quiz, status,
survey, video, and vote. Among these categories, posts
containing photos are found to have received more likes
than the other seven categories. This is an important
implication for ‘WHO’ to enhance the likes of the posts.
Although photos are less interactive than videos, events
and campaigns, they are better received through likes.
Thus, the photos uploaded by ‘WHO’ are apparently more
expressive in delivering the message of the post and this
will be a big attraction for users. From a broader
perspective, posts with photos control high emotional
content and this has the potential to attract attention
even before looking at the written content. ‘WHO’ can
add photos with survey and campaign posts to highlight
its importance in their Facebook page.
Discussion to improve the involvement (comment)
As mentioned earlier, comments mean user involvement.
A user may like a post for various reasons, but would not
feel “involved” with the topic unless the message stays in
his/her mind, and this happens when the user is able to
record his/her inputs in the post. Thus, Question posts
record a high average for ‘number of comments’. This
result is understandable since, users are encouraged to
respond and engage in these posts. Engagement
motivates users to interact more, and this in turn
increases the morale of a Facebook page. The ‘WHO’
Facebook page, being a genuine repository of facts and
figures, can include more question posts to increase user
involvement/engagement. As observed from the results,
nearly 5% of likes translate as comments. Being more
realistic in nature, ‘WHO’ Facebook page must allow at
06
least 50% of the users to respond in the form of comments
and answers. For this, ‘WHO’ can add more question
posts to engage the hitherto silent user.
Discussion to improve the virality (Shares)
“Shares” can be directly attributed towards ‘word of
mouth’ or ‘viral communication’. Sharing a ‘WHO’
Facebook post, in first will introduce ‘WHO’ as an active
player in the Facebook network. Attracting users are a
primary benchmark for any Facebook page, the same is
applicable to ‘WHO’ to promote health through
Facebook. The results clarify that medium and high level
interactivity has significant effect on the number of
shares. When it comes to category, information posts are
mostly shared by users, as expected. ‘Shares’ are an
important tool to increase the visibility of any Facebook
page. Thus, the ‘WHO’ Facebook page can share
interactive information including, question posts and
campaigns.
Eliciting attention, involvement/engagement and making
it viral are some of the essential components that should
be improved to promote a Facebook page. The interactive
features associated towards posts significantly influences
the ‘number of shares’ of posts. To increase the
promotion potential and to enhance the page viability,
‘WHO’ can concentrate more on information, oriented
posts to enhance their page presence. Although attention
and involvement are necessary, it is more important for
‘WHO’ to first promote their Facebook pages to their
maximum capacity.
With more than 1.23 billion users, Facebook rules the
internet, which is now undeniably an important platform
for the promotion of brands and commodities. While
commercial brands use Facebook to promote their
products or services, there are other Facebook pages that
work towards societal development. The Facebook page
of ‘WHO’ is one of the premier societal pages available in
social media, and its visibility and range can be extended
further by focusing on increased user involvement
through interactions and shares.
Health promotion through social media shows promise in
both academia and health care sectors because the
primary notion of health promotion is to share and create
awareness of health. Not much research is available on
health promotion through social media, especially in the
 Is Interactivity a Major Consideration for Facebook Pages? Evidence from WHO Facebook page
area of understanding the relationship between
interaction level and user attention, engagement and
information spreading. This research shows that
interactivity is very important to increase the ‘number of
shares’ of a page. This result offers insight and guidance to
both ‘WHO’ and other professional health bodies, to
fashion their Facebook pages such that there is more
focus on user interactions so that the reach and
popularity of the page can be significantly enhanced in
order to maximize the potential of social media in health
promotion.
References
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and vividness effects on social presence and
involvement with a web-based advertisement.
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Silvestre, B. S. (2011) Social media? Get serious!
Understanding the functional building blocks of
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• Kreps, G. L., and Neuhauser, L. (2010). New directions
in eHealth communication: opportunities and
challenges. Patient education and counseling, 78,
329-336.
• Nazi, K. M. (2003) The journey to e-health: VA
healthcare network upstate New York (VISN 2).
Journal of Medical Systems, 27, 35-45.
• Neuhauser, L., and Kreps, G. L. (2003) Rethinking
communication in the e-health era. Journal of Health
Psychology, 8, 7-23.
• Oh, H., Rizo, C., Enkin, M., and Jadad, A. (2005) What
is eHealth?: a systematic review of published
definitions. World Hosp Health Serv, 41, 32-40.
• Schein, R., Wilson, K., and Keelan, J. E. (2010).
Literature review on effectiveness of the use of social
media: a report for peel public health. A report for
Peel Public Health, Region of Peel http://www.peel
region.ca/health/resources/pdf/socialmedia.pdf
Accessed June 8, 2014.
• Thackeray, R., Neiger, B. L., Hanson, C. L., and
McKenzie, J. F. (2008) Enhancing promotional
strategies within social marketing programs: use of
Web 2.0 social media. Health promotion practice, 9,
338-343.
• Tse, M. M., Choi, K. C., and Leung, R. S.(2008) E-
health for older people: the use of technology in
health promotion. CyberPsychology & Behavior, 11,
475-479.
07
Online Food Ordering -
Serving Food Conveniently
Dr. Himani Sharma*
Amanpreet Kang*

Abstract
We are living in the world where time and effort are two biggest factors in life; the same applies for food also. Now-a-days people are getting
inclined to foods from the restaurants rather than homemade foods in order to save time and effort. Online food ordering service suits with the lifestyle
of busy working individuals. This is the reason they are getting widely popular among people in the buzy cities of India like Mumbai, Delhi, Bangalore
and Hyderabad. Many restaurants are making online ordering available, thus making it possible for the people to get the food of their choice quickly
and easily. By ordering through leading online food ordering websites, you can have a great dining experience and also save a lot of money by availing
offers provided by them. This case study discusses about the online food ordering industry in India, five prominent players in the industry and the
business models used by them.

Keywords: Food industry, Online ordering, Justeat, Foodpanda, Tastykhana, Yummybay, Deliverychef, Rocket internet, Delivery Hero,
Hungryzone

Food Industry in India
India is known for home-cooked meals and prides itself
on being a society in which food traditions stand strong.
Yet restaurants such as Domino’s Pizza, McDonald’s and
Pizza Hut have not only made an entry into the market
but have flourished. The Indian food industry has seen
strong development over the past few years. The fast
food chains are expanding into India’s smaller cities and
the demand for premium brands across major cities has
resulted in strong growth in past few years. After China,
India is the second largest producer of food in the world,
and has the potential of becoming the largest producer
in the years to come (Corporate Catalyst India, 2012).
According to IreenaVittal, principal, McKinsey & Co., the
food retail sector in India is likely to rise to $150 billion in
2025 from $70 billion in 2008. One of the most promising
sub-sectors is fast food, thus creating a large number of
fast-growing food markets.
Online Food Ordering Industry in
India
The organised food industry is estimated to grow at 25%
to INR 28,000 Cr by 2015. The delivery segment is
growing even faster at 30-40% every year. Add to that,
India’s favorable demographics (65% of our population is
below 35 years if age), increasing online shoppers (20
million online shoppers, 50% of whom are below 25
years of age) and a potential 22 million (number of
facebook users in the age group 18-22) increase in
workforce over the next 5 years and you have the recipe
for a huge business (Sareen, 2013). However, the share
of online orders is very low. As the real estate cost is
increasing, restaurants are also focusing more on

*Assistant Professor, Amity Business School, Noida, AUUP, Noida

08

deliveries and takeaways in order to grow their business.
The arrival of international brands has also encouraged
the growth in home deliveries and takeaway of food. All
these factors indicate well for a one stop platform for food
ordering.
Online food ordering is becoming a new trend these days.
Many studies are showing that there is a demographic
change in the food ordering pattern of the people. The
fast food chains like Mc Donald’s, Pizza hut, Dominos, KFC
etc. came into existence and revolutionized the fast food
market, that lead to many new ways of food ordering.
Online food ordering has now-a-days become very
popular as it has many advantages. Today people are very
much open to new things, and are enjoying the new
services and benefits provided by the restaurants. The
developing nations like India and China are also showing
good responses to those services. Websites like
Foodpanda and Justeat is doing a nice job in providing
online food ordering solutions in domestic as well as in
international markets.
Creating New Business Opportunity
In India, Hungrybangalore was the first portal to launch on
26th July, 2006. Ritesh Kumar Dwivedy, alumni of IIT
Kharagpur while working in an IT firm used to order food
from restaurants, but faced a lot of problems due to lack
of information available on web. He also found it difficult
to communicate his choices with the restaurant as the
order takers are usually too busy to listen. He and his
colleague Priyanka found this was a problem with most of
the people of their profile. They did a small market
research to validate their assumption before starting
Hungrybangalore. They didn't want to be just an
information portal and wanted to enable the users to
place online orders, providing reviews for the restaurants
etc. (Kumar, 2009)
Leading Online Food Ordering Portals
in India
Online food ordering industry has seen a number of
players entering the market. While some like Foodpanda,
JustEat, TastyKhana, etc. are national players, there are
many other local ventures that are focused on single
markets. We will look at five popular online food delivery
portals that are helping India enjoy tastier food at home.
Online Food Ordering - Serving Food Conveniently
(a) Foodpanda
Foodpanda is an on-line food delivery service that
operates in more than 27 countries. It was brought
to India by the entrepreneur duo Amit Kohli and
Rohit Chadda. Foodpanda has been incubated by
Berlin based Rocket Internet. It was launched on
May 2012 in New Delhi. Foodpanda is one of the
online food ordering service platforms that has seen
an exponential growth in past few months in India
and globally. Recently, Foodpanda raised USD 20
million from a group of investors that includes
Rocket Internet, Phenomen Ventures, a Russia
based venture capital firm and Investment AB
Kinnevik, a Sweden based Investment Company.
Foodpanda is serving customers in 12 cities in India
with a network of 2000+ partners including some of
the popular brands like: Pizza Hut, Chicago Pizza,
Subway, Nirula’s, Eatsome, Baskin Robbins, Kabab
Xpress, Faaso’s amongst many others. Foodpanda is
planning to increase its operations to 33 countries
within a year. AmitKohli, Co-founder & Managing
Director, Foodpanda India said that “India is a
market with huge potential where the scope for
growth is immense. However, with internet
penetration of only 8%, it is only logical to target the
more cosmopolitan Tier I cities which have a sizable
working population with mature internet users”.
Foodpanda is concentrating mainly on quality traffic
and targeting potential customers, whom they have
been able to reach very successfully. They are
growing by 25-30% on month-on-month basis.
Currently Foodpanda is getting around 25000-30000
unique visitors a day. In this, 65% of the traffic comes
from Delhi, Mumbai & Bangalore and rest 35% from
Chandigarh, Hyderabad and Pune. The marketing
strategy of Foodpanda is to target the potential
customers when they are online in front of their
computer screens. Hence the focus has majorly
been on digital marketing channels. Foodpanda
launched its mobile app in January, 2013 and it has
already witnessed more than 250,000 app
downloads which is a clear indicator of the need for
innovation in the space. As of May, mobile orders
contribute 15% to the total orders. (Sareen, 2013)
09
 Prastuti: Vol. 4, No. 1, July 2015

delivery orders coming from Bangalore. They have

over 3 lakh registered customers. The average
commission on each booking or order would be
around 12%. (Brindaalakshmi. K., 2013). The latest
addition to the international Just Eat campaign is the
“Don’t Cook, Just Eat” tagline which has revamped
the brand’s global positioning. The company handles
the back-end processes of online and digital
marketing and order processing on behalf of the
restaurants.

Exhibit 1: Home page of Foodpanda

(Source: www.foodpanda.in)

(b) JustEat

Just Eat is an online food ordering and delivery

service, headquartered in London. It is operating in
13 countries around the globe: Argentina, Belgium,
Brasil, Canada, Denmark, France, India, Ireland, Italy,
Netherlands, Norway, Spain, Switzerland and UK.
The platform allows customers to search for their
favorite food chains and place orders online, and
choose from delivery or pickup options. As of August Exhibit 2: Home page of JustEat
2013, Just Eat has roped in 34,000 restaurants
worldwide. JustEat.in was originally started as (Source: www.justeat.in)
Hungry Zone in 2006 at Bangalore by Ritesh Kumar
(c) TastyKhana
Dwivedy. In 2011, London based online ordering
Shachin Bhardwaj and Sheldon D’Souza decided to
service Justeat acquired 60% stake in Hungry Zone
venture into India’s vast food industry in 2007 when
and the company was rebranded as JustEat
Bhardwaj noticed the need for more Web-available
India.HungryZone was launched as Hungry
information on the city’s restaurant sector. So they
Bangalore, but later expanded operations to Delhi,
started an online food order portal TastyKhana
Mumbai and Pune. Justeat is having a team of
providing services in Pune. Both founders grew up in
around 100 people with the main team (including
Pune and graduated from the Maharashtra Institute
tech support and marketing) present in Bangalore
of Technology, Pune University, and both had totally
and sales teams are present in Mumbai and Delhi.
different careers before taking this path - Shachin
was working as a quality control specialist in
The company allows consumers to book tables and
SynygyInc and Sheldon was a software developer at
order food using their website, mobile app or phone
an embedded system company called Codito.
and has partnerships with over 2000 restaurants in 4
cities - Bangalore, Delhi NCR, Mumbai and Pune. It
The company started as an online food-ordering
also has partnerships with chains like Pizza Hut, Pizza
website that offered menus of restaurants so that
Corner, Mast Kalandar among others due to which
customers could easily order from the menu.
JustEat is also present in cities like Chennai, Kolkata,
TastyKhana’s services expanded to include food
Kochi and Hyderabad. The company claims that it
delivery anywhere in Pune, table reservations and
has processed about 12 lakh orders from 3 lakh
party venues for those who wish to hold private
unique customers till now, with majority of home
events. TastyKhana was initially founded with

10

personal savings from the founders, angel investors,
and with the help of friends. A big change happened
in October, 2008 when the business model of
TastyKhana was changed. They incorporated a food
delivery service with delivery managed by
TastyKhana. This was done by acquiring a small
delivery service provider called Food on Wheels.
This acquisition considerably changed the model of
business and helped them to ramp up revenues by
ten times of their initial numbers. The acquisition of
Food on Wheels was the milestone in the two-year-
old company’s change from online listing service to
an end-to-end service provider.
The word of mouth and referrals by the restaurants
have been the primary ways in which TastyKhana has
found its customers. The restaurants themselves
provided such calls since they can outsource the
delivery service to TastyKhana. Whenever a
customer calls the restaurant, the lead is
automatically forwarded to the company.
TastyKhana addresses the needs of small restaurant
owners who are unable to manage their own
delivery service. The outsourcing of delivery services
makes excellent business sense, and it helped
Tastykhana to generate additional revenues.
According to both founders, the outsourcing of
delivery is what has contributed to the company’s
current position. (Valdez, 2010)
The Revenue sources for tastykhana are
Commissions from restaurant, charged services to
end users, Advertisement income and
Registration/Retention Fee for the restaurants.
Berlin-based food delivery company Delivery Hero is
investing $5 million in TastyKhana, as part of a wider
partnership between the two companies, and a
preamble to its entry into the country. Delivery Hero
earlier participated in the company’s seed round in
2012. TastyKhana is operating mainly in four cities
across the country covering more than 3,000
restaurants. TastyKhana saw a 400 percent growth in
orders since the beginning of 2012. This is one of the
reasons that have prompted Delivery Hero to make
an investment in the firm. TastyKhana offers apps for
Android, iOS and BlackBerry in addition to its online
service. Berlin based Delivery Hero is currently
operating in 14 countries. It looks like DeliveryHero
Online Food Ordering - Serving Food Conveniently
is going to enter into Indian market similar to its rival
JustEat, which entered into Indian market by
acquiring a 60 percent stake in HungryZone. (Russell,
2013).
Exhibit 3: Home page of TastyKhana
(Source: www.tastykhana.in)
(d) Deliverychef
AnkitaTandon and AditiKapur, both 26, were
roommates in London in 2007 for a year. Because of
their busy working life, they had very little time for
daily necessities like cooking and they found
ordering food as a quick-fix solution. The next year,
Aditi quit her job at Morgan Stanley and returned to
India for pursuing MBA. While Aditi was in India,
Ankita was still with Deutsche Bank in London.
During a casual chat they concluded that e-
c o m m e rc e i n I n d i a i s g o i n g t o p l ay a
transformational role in people's lives. By 2009,
online booking of tickets had picked up pace,
showing an indication that customers are willing to
make online financial transactions if they were
provided with detailed information. This trend
extended to online food ordering but there was no
single platform giving information about all the
restaurants. The companies that are offering home
delivery, floated menus online that were not
updated and the busy telephone lines did not help
customers either.
Aditi and Ankita carried out a market research in
2010 and opened the site for a closed group of
people to comprehend user experience and
incorporated suggestions before going live in the
11
 Prastuti: Vol. 4, No. 1, July 2015
mid of 2011. Restaurants must fulfill three basic
requirements before they can be listed on
Deliverychef portal. First, they need to have a
mechanism such that Deliverychef can electronically
transmit order details directly to the restaurant.
Second, the restaurants should hold a valid bank
account for transactions and Legal formalities must
be in place. Lastly, restaurants must have their own
delivery arrangements. Deliverychef will receive 10
to 15 percent of total order value as commission.
Deliverchef also feeds the corporate world, as they
tied up with many organisations. The Companies
offer employee codes and allocate budgets per
employee to Deliverychef. A win-win for both
employer and employeees as it benefits the former
by doing away with verification and accounting of
food reimbursements, while the latter saves from
the hassle of claiming food bills. Deliverychef verifies
all restaurants by conducting a hygiene test around
parameters like quality of food, cleanliness etc. The
feedback from customers is also taken into
consideration. Mishandling of food and Untimely
deliveries can delist a defaulter restaurant from the
website. Deliverychef has partnerships with over
500 restaurants including Faaso's, Copper Chimney,
Mad over Donuts, McDonald's, apart from smaller
ones like Smokin' Joe's, Salsa Wraps, among others.
Deliverychef started its operations in Pune and has
since expanded to Navi Mumbai, Mumbai and Thane
(moneycontrol, 2013).
Exhibit 4: Home page of Deliverychef
(Source: www.deliverychef.in)
12
(e) Yummybay
Yummybay is an online food ordering portal which is
owned by Kochi based Amicitia Food Mart Pvt Ltd.
Yummybay tied up with over 4000 restaurants
across 8 major cities in India: Bangalore, Chennai,
Delhi, Mumbai, Pune, Kochi, Calicut and Trivandrum.
Yummybay was launched on October, 2010 by
husband-wife couple KettyCherian and Vineetha
under Kochi-based incubator Startup Village. They
started as a free service for both restaurants and
users and it became an immediate hit. As the
demand increased, they added a revenue model and
started charging restaurants a nominal commission
per order. In addition to ordering food online, users
can also view restaurant details, menu,
photographs, offers, ratings and reviews.
Before setting up Yummybay, KettyCherian founded
a web services company named Aadhocc Software
Technologies Pvt Ltd. Cherian holds an MBA from De
Montfort University, UK while Vineetha holds a
B.Tech in Information Technology from IGNOU. The
company started with a beta launch in Kochi and
expanded to other cities in Kerala within two years.
Yummybay now provide services to customers in
Bangalore, Chennai, Mumbai, Delhi and Pune along
with Kochi, Trivandrum and Calicut in Kerala.
Yummybay also expanded its footprint into Qatar
and is looking to start operations in UAE, Singapore
and Malaysia by the end of 2013. Yummybay follows
a franchisee model in Qatar and has captured 400
clients there. It is going to follow the same model in
other foreign markets. In foreign markets, revenue is
shared based on a mutually agreed commission and
while the overseas partner handles the operations
and digital marketing, the User Interface and
technology support are handled by Yummybay. It is
promoting transfer of cakes sent as gifts to Qatar
from India.
Yummybay allows the customers to search by
location, restaurant and cuisine type. Users can
either opt for cash on delivery or pay online.
Yummybay will receive 10 percent of total order
value as commission from restaurants. It also
generates revenue from advertisements and
sponsored listings on their website. Yummybay is
 Online Food Ordering - Serving Food Conveniently

now looking for funding and is already in talks with a

couple of investors.This could be critical for the
startup to make a mark against competitors with
more financial muscle. Foodpanda is a part of the
digital ventures stable of Berlin based Rocket
Internet while JustEat is an international firm which
also operates in India and TastyKhana is getting
investments from German based Delivery Hero.
According to KettyCherian, Yummybay is betting on
carving a space with user friendly interface and
other tech capabilities such as better and smoother
search on the site. (Abudheen, 2013)

Exhibit 5: Home page of Yummybay

(Source: www.yummybay.com)

Company Alexa Rank Founded Headquarters Areas Served Mobile App

Local Global
Delhi NCR, Mumbai
Hyderabad, Panchkula /
FoodPanda 787 11398 2012 Delhi Yes
Chandigarh / Mohali,
Bangalore, Pune, Jaipur
Bangalore, Delhi NCR
JustEat 2301 26088 2006 Bangalore Yes
Mumbai
Pune, Mumbai,
TastyKhana 2659 38944 2007 Pune Yes
Bangalore, Delhi NCR
DeliveryChef 10402 94491 2011 Mumbai Mumbai, Pune No
Kerala, Bangalore,
Yummybay 32113 226505 2010 Kochi Chennai, Mumbai, Delhi, No
Pune

Exhibit 6: Major Players in Indian Online Food Ordering Industry

Business Model Used by the Portals
The business model followed by majority of the online
food ordering portals has the following features:
• Restaurants will be listed on portal and their menu
will be uploaded on the website. These companies
generally works on a commission model - i.e. the
restaurant pays them 5% to 20% of the order value
for all the orders generated through the portal.
• Customers can choose from the various restaurants
listed on the website. They cansearch by location,
restaurant and cuisine type and place an order
online. Customers can pay cash online or opt for cash
on delivery.
• Upon receiving the order, the company
representative calls the restaurant and places the
order.
• The restaurant then fulfills the order, like they would
do for a normal delivery order. They deliver the food
and collect the cash.
• At the end of the month, the company sends an
invoice to the restaurant listing all the orders placed
by them with the commission that needs to be paid
and collect the money/check from the restaurant.
(Narayanan, 2011)

13
 Prastuti: Vol. 4, No. 1, July 2015
Conclusion
Online food ordering has now days become very popular
in India as it has many of the advantages of its own. Today
people are very much open to new things, and are
enjoying the new services provided by the restaurants.
Food is a big necessity of life and the greatest advantage
of online ordering is it is time saving. Online order placing
and food delivery service suits with the lifestyle of busy
working individuals and fast paced life of today. This is the
reason they are getting widely popular among people in
the prime cities of India like Mumbai, Delhi, Bangalore
and Hyderabad. Many restaurants are getting available
for online ordering, thus making it possible for the people
to get the food of their choice quickly and easily. The
online ordering portals are also coming up with new
innovation technologies in order to enhance customer
experience.
Case Questions:
1) What is the scope of online food ordering industry in
India? Comment about the foreign players entering
in the Indian market?
2) What kind of marketing strategies you think should
be implemented for this type of industry?
3) Do you think the introduction of mobile applications
for food ordering will enhance the customer
experience? Critically comment.
4) Do you agree that innovation is one of the key drivers
for becoming success in this space? Why or why not.
References
• Abudheen, S. K. (2013, may 2). Yummybay claims
wide footprint in online food ordering business, also
expands overseas. Retrieved july 30, 2013, from
techcircle: http://techcircle.vccircle.com/2013/05/
02/yummybay-claims-wide-footprint-in-online-
food-ordering-business-also-expands-overseas/
• Brindaalakshmi.K. (2013, february 21). JustEat CEO
Ritesh Dwivedy On Home Delivery Business,
Partnerships And Mobile Strategy. Retrieved july 30,
2013, from medianama: http://www.media
14
nama.com/2013/02/223-justeat-ceo-ritesh-
dwivedy-interview-part-i/
• Corporate Catalyst India. (2012). A brief report on
Indian Food Processing Sector in India. New Delhi:
Corporate Catalyst India.
• Foodpanda.in site info. (n.d.). Retrieved july 30,
2013, from alexa: http://www.alexa.com/
siteinfo/foodpanda.in#trafficstats
• Kumar, J. (2009, june 26). Online food ordering has
now days become very popular as it has many of the
advantages of its own. Today people are very much
open to new things, and are enjoying the new
services provided . Retrieved july 28, 2013, from
mybangalore: http://www.mybangalore.com/
article/0609/hungry-bangalore-order-food-
online.html
• moneycontrol. (2013, july 31). Deliverychef lets you
choose from menus of 600 restaurants! Retrieved
july 31, 2013, from moneycontrol:
http://www.moneycontrol.com/smementor/mento
rade/starting-up/deliverychef-lets-you-choose
menus600-restaurants-928540.html
• Narayanan, J. (2011, november 22). Marketing
Option Assessment - Websites offering customers
Online Ordering mechanisms. Retrieved july 30,
2013, from restobizindia: http://restobizindia.
blogspot.in/2011/11/marketing-option-assessment
-websites.html
• Russell, J. (2013, june 13). Delivery Hero invests $5
million in India-based food delivery startup
TastyKhana. Retrieved july 30, 2013, from
thenextweb: http://thenextweb.com/in/2013/06/
13/delivery-hero-invests-5-million-in-india-based-
food-delivery-startup-tastykhana/
• Sareen, P. (2013, may 14). “We have shaped the
market for ordering food online,” Amit Kohli, MD,
Foodpanda India. Retrieved july 28, 2013, from
iamwire: “We have shaped the market for ordering
food online,” Amit Kohli, MD, Foodpanda India
• Valdez, E. (2010, april 17). Food Entreprenueurs:
TastyKhana. Retrieved july 29, 2013, from
sramanamitra: http://www.sramanamitra.com/
2010/04/17/food-entreprenueurs-tastykhana/
Forms of Online Financial Reporting
of selected Indian and U.S. Banks
Prof. Pramod Kumar*
Meenakshi Chawla**

Abstract
The development of the Internet as a global and excited medium for dissemination of financial information creates a new reporting
environment. This study examines the forms of Online Financial Reporting of selected Indian and U.S. banks, for this purpose five banks selected from
each country on the basis of market capitalization and net worth, with the help of these forms banks can communicate with their external stakeholders.
World Wide Web (WWW) technologies are extensively used for disseminating financial information around the world. A growing percentage of
competition companies disseminate information on its respective websites like financial data, financial performance, social and environmental issues,
corporate information, corporate governance, marketing and other information are presented in multitude forms of annual reports like HTML,
(Hypertext Markup Language), PDF (Portable Document Format) and XBRL (eXtensible Business Reporting Language). HTML and PDF are the oldest
form of disseminating financial information on the websites but XBRL is the new form of reporting financial information on the websites. From 2010
onwards SEC mandate, banks are required to tag their face financial statements through XBRL. Banks are required to tag its financial statement
footnotes and financial statement schedules.

Keywords: HTML, PDF, XBRL, WWW, SEC

Introduction
Due to dynamic nature of the business, reporting
practices has changed now; earlier forms of reporting
was not so interactive and there is need not to be shown
everything about the business. Due to change in time,
the complex city in the business arises and companies
start focuses on reporting practices and disclosed each
and every aspect of the business. Earlier companies
were presented its financial statements i.e. profit and
loss account, balance sheet, cash flow statement,
auditor’s report, directors reports, notes to account etc
only in the hard bound of annual report but now
companies disclosed its financial statement not only in
hard bound but also in soft bound. Online disclosure/
presentation of annual reports have become popular in
these days; these sources are adopted by various
companies it’s not only cost effective but also eco
friendly.
The Internet, being the fastest mode of communication,
multidirectional in nature and very fast in transmission,
has the widest reach in the present world. The
Companies financial information are presented in
various forms like HTML (Hyper Text Markup Language),
PDF (Portable Document Format) and XBRL (eXtensible
Business Reporting Language) these reports available on
the respective websites of the companies, and it’s
common for all and offer of free information made
available for interested net- surfer.
This paper emphasis on various forms of online financial
reporting, to conduct this study five banks from each
country (India, U.S.) have been taken, from India SBI,
ICICI Bank, AXIS Bank, Bank of Baroda, Punjab National

*Head, Accountancy and Law & Dean Faculty of Commerce Dayal Bagh Educational Institute (Deemed University),
DayalBagh Agra.
**Research Scholar, Department of Accountancy & Law, Faculty of Commerce,
Dayal Bagh Educational Institute (Deemed University) Dayalbagh Agra. 15
 Prastuti: Vol. 4, No. 1, July 2015

Bank and from U.S. Bank of New York and Mellon,
Goldman Sachs Group, Wells Fargo, American Express,
SunTrust have been taken in to consideration, for this
purpose an index/ checklist have been prepared by
researcher or to check whether selected banks are
affected by these factors or not.
Review of Literature
This is an essential aspect of an investigation is a review of
the related literature which is general prospective survey
of previous researches pertaining to one’s problem. It is
obviously imprudent and wasteful to proceed in any study
without knowing what has been done before. The
literature in any field forms foundation upon which all
future is built. The following studies have been reviewed
for this purpose.

S. NO AAUTHOR YEAR TITLE AREA/ OBJECTIVE FINDINGS

COUNTRY

1. Peter B. 2003 “Determinants “New “In this paper “The results indicate
Oyelere of Internet Zealand”. researcher examines that some
Financial the determinants of determinants of
Reporting by voluntary traditional
New Zealand financial reporting financial reporting firm
Companies”. through traditional size, liquidity,
media such as print- industrial sector and
based annual spread of
reports”. shareholding - are
determinants of
voluntary adoption
of Internet financial
reporting (IFR)”.
2. Alfred 2003 “Economic “Australia”. “The paper “The findings are that
Wagerhofer Consequences considers two major First, the Internet
Of Internet economic effects changes the costs of
Financial created by information processes
Reporting”. the Internet for and with it the
financial accounting demand and supply
and disclosure” of financial information
in capital markets.
Second, IFR creates a
demand for
standardization,
which has been taken
up with the
development of
XBRL”.

3. Robert 2003 “Determinants “Washington”. “This study verifies “We find that firms
M.Bowen of Revenue the association with greater cash
Reporting between market burn rates and higher
Practices for capitalization and levels of activity on
Internet revenue, and Motley Fool message
Firms”. examines economic boards are

16
 Forms of Online Financial Reporting of selected Indian and U.S. Banks

S. NO AAUTHOR YEAR TITLE AREA/ OBJECTIVE FINDINGS

COUNTRY

factors that consistently

potentially influence associated with barter
Internet company and grossed-up
managers' decisions revenue reporting”.
to adopt allegedly
aggressive revenue
recognition
policies”.

4. Luiz Alberto 2004 “ The “Latin “Studies have “The result has also
De Lira Alves Voluntary America”. evaluated that the been observed that it
Disclosure of practice of is irrelevant the
Financial Corporate country (COUNT) in
information Governance which the company
on the adopted by Latin operates to the
Internet and American association between
the Firm companies is still in the voluntary
Value Effect the beginning”. disclosure
in of financial information
Companies on its web page and
across Latin the firm value”.
America”
5. Marston, C. 2004 “Corporate “Germany” “The use of the “They found that
and polei A reporting on . internet for financial company size was the
the internet information only variable
by German disclosure by explaining financial
companies” German companies disclosure on the
in 2000 and 2003 internet for those
and identified two years”.
factors influencing
financial disclosure
on the internet.”.
6. Samir 2004 “The “Canada”. “The impact of “We interpret this
Trabelsi Management Internet financial variability in the
of Financial reporting (IFR) on incremental
Disclosure on financial accounting difference of IFR over
Corporate theory by TFR, as an indication
Websites: A incorporating it in that a firm's ritualistic
Conceptual the general or opportunistic
Model”. management behaviour under IFR is
framework”. not different from its
behaviour under
TFR”.

17
 Prastuti: Vol. 4, No. 1, July 2015

S. NO AAUTHOR YEAR TITLE AREA/ OBJECTIVE FINDINGS

COUNTRY

7. Peter J 2004 “Corporate “U.S.”. “This study shows “The US economy

Wallison Disclosure In excessive continues to spawn
The Internet speculation, an innovative companies
Age”. unsustainable and new ideas. It
bubble in economy”. would be ironic if the
capital markets”.

8. Nikolas 2006 “Financial “Nicosia “This paper “Financial

Diakidis Reporting Cyprus”. studies reporting dis reporting on
Practices on closure practices on the internet is not
the Internet : the websites of largely adopted for
The case of companies listed in the firms listed in
Companies the Cyprus Stock Cyprus Stock
Listed in the Exchange”. Exchange, as
Cyprus Stock compared with
Exchange”. international
evidence in this
area.”.

9. Ivica pervan 2006 “voluntary “Crotian “It focused on stock “The comparative
financial and market listed crotian aspect of the research
reporting on Slovene”. and Slovene joint showed that Slovene
the internet – stock companies has corporations have a
analysis of two basic aspects, statistically significant
the practice comparative and higher level of
of Croatian explanatory” financial reporting”.
and Slovene
listed joint
stock
companies”.

10. Muther talal 2006 “web-based “Jordan”. “It investigated the “The researchers
momany voluntary extent of financial find that about
and AL-dain financial reporting on the (45%) of the
AL- shorman reporting of internet of the companies have
Jordanian Jordanian website. While
companies”. companies listed in (70%) of the
the first market on website’s
Amman Stock companies report
Exchange (ASE) for financial
the year 2004”. information,
only (30%) don’t
report any financial
information”.

18
 Forms of Online Financial Reporting of selected Indian and U.S. Banks

Objective specific objective and utilizes the large number of data of

selected banks.
• In this paper researcher examine the forms of Online
Financial Reporting practices. Sample size
For attaining objective, the following banks have been
taken for the study purpose:
Research Methodology

Research Design
The research design of this paper has been Descriptive as
well as Analytical because it have been carried out with

INDIA U.S.
BSE NYSE
1. State Bank of India The Bank of New York Mellon
Corporation (BNY)
2. ICICI Bank Sun trust
3. Axis Bank American express
4. Bank of Baroda The Goldman Sachs Group
5. Punjab National Bank Wells Fargo & Company

Selection criteria of Sample Methodology

(i) On the basis of Net worth and Market Capitalization
exceeding Rupees 1000 crores.
Duration of the study
For the purpose of analysis of data, a period of last
financial year starts from 2013-14 have been taken in to
consideration.
Sample Data:-
The relevant data have been collected from secondary
sources comprises of published reports like Reports on
Trend and Progress of Banking in India, Web Sites,
Periodicals, Newspapers and Annual Reports published
by Banks.
Statistical Tools
For analysis qualitative data statistical tools Logit and
Probit Model have been taken into consideration through
SPSS.
This section of the study includes description of
dependent and independent variables as well as those
factors which affect Online Financial Reporting Practices.
These factors are divided into three parts. First part
related to Contents helps in Online Financial Reporting,
Second part related to Networking, which helps to
maintain websites of the banking company and third part
related to Corporate Web and Mail Services, which means
how banking companies provide reporting services to
their stakeholders/ Investors.
The Dependent variable of this study is Online Financial
Reporting. For this purpose an index has been prepared
by researcher that helps to access banks websites.
1. Contents help in Online Financial Reporting- The
contents available/ disclosed on the website of the
companies through HTML, PDF and XBRL format

Hypothesis

Ho1: There is positive association between the variables

that effect online financial reporting.

19
 Prastuti: Vol. 4, No. 1, July 2015

based on XML, which is the universal format for

structuring documents and data on the web. In an
XBRL compliant report, each financial and non-
financial item is enclosed by a pair of XBRL tags,
which describes the meaning of the item. These tags
provide semantic information to the reports and
make the financial reports not only human readable
but also computer comprehensible. Leveraging the
power of computers and the Internet, XBRL provides
the financial community a standard to electronically
and automatically prepare, publish, exchange, and
extract financial statements. It is expected that XBRL
a. HTML (Hyper Text Markup Language):- HTML or
will have widespread effects on financial reporting.
Hypertext Markup Language is the set of markup
First, preparing financial reports will be easier with
language that helps to create Web page of the
XBRL”.
company. Web browser can read HTML files and it is
available in the form link and these files are visible
2. Corporate Web and Mail Services:- Development of
and audible. The browser does not display the HTML
information technology is so rapidly increase a use of
tags, but uses them to construe the content of the
internet, this source has become popular means of
page. Web browsers can also refers Cascading Style
communication and it is much better than
Sheets (CSS) are also used for layout of text and other
traditional/paper based reports as well as cost
material. It is a stylish language sheet used for
effective. Earlier banks sending their printed
describing the look and formatting of a document
financial statement (annual report) to their
written in a markup language. While it is mainly used
stakeholders but now these financial statements are
to change the style of web pages and user interfaces
send to their stakeholders through E-mail or sending
written in HTML.
a link which is open through the website of a
b. PDF (Portable Document Format):- It is a file format
company.
used to present documents in a manner
a. Internal Social Media:- This technique is also
independent of application software, hardware, and
adopted by various banks, for this social software is
operating systems. Each PDF file encapsulates a
designed to meet out the needs of business and
complete description of a fixed-layout flat
empowers bank’s employees to be more innovative
document, including the text, fonts, graphics, and
and productive, where creative ideas can be
other information needed to display it.
exchanged that can foster increase in business
growth. There are five internal media tools adopted
PDF files are available into two forms Unabridged and
by banks like yammer, Digsby, Skype, Wiki, Pod caste.
Abridged formats.
b. External Social Media:- Banking companies
communicate its stakeholders through external
Unabridged format includes detailed information of the
social media also like Face book and Twitter, it starts
company and abridged format includes condensed
as online networks for people to connect with one
information like Profit and Loss Account, Balance Sheet,
another, have evolved into legitimate publishing
Cash Flow Statement and Auditors Report, which is
platforms for businesses. Social media channels now
required by shareholders. In case of Indian Banks, these
represent some of the fastest and most reliable ways
Unabridged and Abridged reports are available in two
to communicate with the public. Every bank has
languages, Hindi and English. In case of U.S. Banks these
created branded profiles to transmit information to
reports are available only in English format.
their followers.

c. XBRL (eXtensible Business Reporting Language):-

“XBRL is an electronic markup language for the
purpose of corporate business reporting. XBRL is

20
 Forms of Online Financial Reporting of selected Indian and U.S. Banks

ONLINE FINANCIAL REPORTING

Data Analysis

In this paper the following Hypothesis has been framed

HTML and it has been analyzed through Logit Model; it is
probabilistic statistical model and applicable in
qualitative data. Logit or Logistic regression measures the
CONTENTS PDF relationship between the categorical dependent variable
HELP IN
ONLINE and one or more independent variables, which are usually
FINANCIAL (but not necessarily) continuous, by using probability
XBRL scores as the predicted values of the dependent variable.

Equation:
INTERNAL
SOCIAL MEDIA
BANKS WEB
AND MAIL
SERVICES

EXTERNAL
SOCIAL MEDIA
END

Flow Chart

Omnibus Tests of Model Coefficients

Chi-square df Sig.
Step 1 Step 7.235 3 .065
Block 7.235 3 .065
Model 7.235 3 .065

a
Classification Table
Predicted
IFR Percentage
Observed 0 1 Correct
Step 1 IFR 0 1 1 50.0
1 0 8 100.0
Overall Percentage 90.0
a. The cut value is .500

21
 Prastuti: Vol. 4, No. 1, July 2015
Variables in the Equation
B S.E.
a
Step 1 XBRL -38.166
INTERNALMEDIA 18.736
EXTERNALMEDIA 38.541
Constant -76.013
a. Variable(s) entered on step 1: XBRL, INTERNALMEDIA, and EXTERNALMEDIA.
Source: Calculation show in Annexure 1
Interpretation:
These estimates shows the relationship between the
Independent Variables and the dependent variables,
where the dependent variables is on the logit scale. These
estimates tell the amount of increase or decrease, if the
sign of the coefficient is negative and the predicted log
odds of honcomp is equal to 1 that would be predicted by
a 1 unit increase (or decrease) in the predictor, holding all
other predictors constant. In this example, the statistics
for the Step, Model and Block are the same because we
have not used stepwise logistic regression or blocking.
The value given in the Sig. column is the probability of
obtaining the chi-square statistic given that the null
hypothesis is true. In other words, this is the probability of
obtaining this chi-square statistic (7.235) if there is in fact
no effect of the independent variables, taken together, on
the dependent variable. This is, of course, the pvalue,
which is compared to a critical value, perhaps .05 or .01 to
determine if the overall model is statistically significant. In
this case, the model is statistically significant because the
pvalue is less than .000.
Conclusion
In the world of competition, it is required for any
company/banks to disclosure each and every aspect of
presentation whether on hard copy of annual reports or
soft copy, displayed on the websites. To disclose the
information on the websites, banks/ companies required
needs particular format in which it’s disclose information.
There are three forms of disclosing information on the
websites like HTML, PDF and XBRL. HTML and PDF is
commonly used by all companies whether Indian, U.S.
banks. While XBRL is not commonly used forms of
22
Wald df Sig. Exp(B)
4.499E4 .000 1 .999 .000
1.171E4 .000 1 .999 1.371E8
2.316E4 .000 1 .999 5.471E16
4.041E4 .000 1 .998 .000
reporting, from 2010 onwards SEC mandate reporting in
XBRL format while it is not mandate in India.
Reference
• Peter B. Oyelere (2003), “Determinants of Internet
Financial Reporting by New Zealand Companies”
• Alfred Wagerhofer (2003), “Economic Consequences
Of Internet Financial Reporting”
• Robert M. Bowen (2003), “Determinants of Revenue
Reporting Practices for Internet Firms”
• Luiz Alberto De Lira Alves (2004), “The Voluntary
Disclosure of Financial information on the Internet
and the Firm Value Effect in Companies across Latin
America”
• Marston, C. and Polei A (2004) “corporate reporting
on the internet by German companies”
• Samir Trabelsi (2004) “The Management of Financial
Disclosure on Corporate Websites: A Conceptual
Model
• Peter J Wallison (2004),”Corporate Disclosure In The
Internet Age”, in U.S
• Nikolas Diakidis (2006), “Financial Reporting
Practices on the Internet: The case of Companies
Listed in the Cyprus Stock Exchange”
• Ivica Pervan (2006), “Voluntary Financial Reporting
On The Internet - Analysis Of The Practice Of Croatian
And Slovene Listed Joint Stock Companies”, Journal of
Financial Theory and Practices, Vol. 29, 2006
• Muther Talal Momany and Salah Al-Dain Al-Shorman
(2006), “Web-Based Voluntary Financial Reporting of
Jordanian Companies”, International Review of
Business Research Papers Vol. 2 No. 2 October 2006,
Pp. 127 - 139
 Annexure 1

INDEPENDENT VARIABLES

Checklist
S.No Particulars Indian Banks U.S Banks

SBI AXIS ICICI BOB PNB BNY WELLS GOLD AMERICAN SUN
FARGO MANS EXPRESS TRUST
1. Contents helps in Online Financial
Reporting
(i) HTML (Hyper Text Markup 1 1 1 1 1 1 1 1 1 1
Language)
(ii) PDF (Portable Document 1 1 1 1 1 1 1 1 1 1
Format)
(a)Unabridged Annual Report 1 1 1 1 1 1 1 1 1 1

(b)Abridged Annual Report 1 1 1 1 1 1 1 1 1 1

(iii) XBRL (Extensible Business 0 0 0 0 1 1 1 1 1 1
Reporting Language)
2. Corporate Web and Mail Services

(i) Internal Social Media 1 1 1 1 1 1 1 1 1 1

(ii) Bank has made available its 1 1 1 1 1 1 1 1 1 1

presence on External Social Media
Forms of Online Financial Reporting of selected Indian and U.S. Banks

23
Presence of Seasonality in Stock Market:
A Reference from India and US
Himani Arya*
Dr. Dinesh K Sharma**

Abstract
Seasonality is periodical and repetitive change in a time series data. It is present in many fields such as production, sales and asset market.
Seasonality in return from the stock markets has been the interesting topic for researchers and investors. Although researchers do not agree on the
existence of seasonality, supporters of Efficient Market Hypothesis negate seasonality. This research paper analyses Indian and US stock market to
validate the existence of any seasonality persistence in any day of the week or any month of the year interval. Data before and after the global crisis of
2008 has been analysed separately to examine if there a change in the pattern of seasonality after the crisis.

Keywords: Seasonality, Day-of-the-Week Effect, Month-of-the-Year Effect, CNX 500, S&P 500, Stock Market Index

Introduction attracts consumers who are enjoying a period of

Seasonality is periodical and repetitive change in a time
series data which occurs after a continuous period of
time. This term came from the stream of geography
where seasonality persists due to revolution of earth, tilt
of earth relative to its revolution plain and sunlight.
Seasonality is studied in production, sales and labor
market also. Seasonality in production is a characteristic
of a number of branches of industry, including the meat,
dairy, fish, food, and lumber industries, construction and
agriculture, etc. Seasonal variations in employment are
also seen in the industry. For example labors working in
sugar industry face unemployment when sugarcane is
not available. In case of sales, seasonality can be seen as
a function of Demand. For instance sale of vehicles
increase during festive seasons where demand is
created by offering so many discounts and offers which
bonuses and rewards. A higher volume in sales can be
seen in the US at the time of Winters similarly it can be
seen at the time of Summers in India.
Literature shows that seasonality persists in stock
market as well, where a pattern in return on investment
has been reported from many stock markets in the
world. Seasonal effect due to behavioral causes in the
form of January effect, May effect, December effect,
Monday effect and Holiday effect are observed.
Researchers have also tried finding out many other
aspects of seasonality like turn of the month effect,
fortnightly effect, quarterly effect, half yearly effect and
so on. Some of these effects persist in some markets or
the other at some period of time. There are reasons like
closing of the year, holidays (christmas, year-end), tax
avoidance mechanism which support the existence of

*Full Time Research Scholar, School of Management, Gautam Buddha University, Greater Noida.
**Assistant Professor, Head of Department, School of Management, Gautam Buddha University, Greater Noida.

24
 Presence of Seasonality in Stock Market: A Reference from India and US
seasonality in different effects. Payment in the year-end,
sentiments during holidays, Aberrations in financial
reporting, harvest time and heating season may be
attributed for seasonality effect in asset market
particularly in stock market.
Also, any kind of existence of seasonality in a stock market
means that market does not follow a very strong financial
hypothesis known as efficient market hypothesis.
Efficient market hypothesis says the prices in the market
are comprised of each and every information available to
the public; one cannot make abnormal profits due to any
information available. But in case of seasonality if there is
a pattern that is being followed in the return, one can buy
and sell according to the pattern seasonality is following.
It can also be observed that if investors are following this
pattern seasonality will not last for long. Therefore as the
investor becomes more and more knowledgeable the
existence of seasonality must fade. Hence a study for
older and newer period can depict whether the
seasonality is affected by maturates of investors in the
stock market.
Just like climatic prediction of meteorology department
about rains and monsoon, based on certain tools and
historical data, helps farmers and the economy to take its
course, seasonality study in stock market too may help
investors to accumulate profits on their investment if any
persists in the stock market.
Literature Review
Literature on seasonality in stock market dates back to
1919 when Harvard Committee on Research in a
comprehensive study of stock prices from January 1897 to
January 1914, revealed that there were not any evidence
of seasonal tendency. Wachtel(1942) quoted that
findings of Richard N. Owens and Charls O. Hardy for the
stock prices data up to 1925 presentes a decided lack of
seasonality. But Wachtel reported frequent bullish
tendencies from December to January for the period of
1927 to 1942 and suggested that seasonal curve must be
watched while formulating investment strategy.
Different calendar effects have been reported since then
in many studies. Day-of-the-week effect has been
reported extensively in various studies (Kelly, 1930;
Hirsch, 1968; Cross, 1973; Gibbons and Hess, 1981;
Smirlock and Starks, 1986; Jaffe and Westerfield, 1989).
Cross(1973) studied the behavior of stock price of New
york exchange for the period of 1953 to 1970 and
reported the behavior of stock prices on Fridays and
Mondays. Stefanescu et al(2009) indicated a significant
Thursday effect for Bucharest Stock Exchange and for
most of the ten stocks.
Similar researches have been reciprocated for Indian
stock market. Anand Sasidharan (2009) reported that
stock market returns form indian stock exchange Nifty for
the period of 1991 to 2008 did not depict seasonality and
attributed one of the calendar effect the-month-of-the-
year effect to extreme observations. However Dash et al
(2011) explored the interplay between the month-of-the-
year effect and market crash effects on monthly returns in
Indian stock markets and reported positive November,
August, and December effects, and a negative March
effect.
While these studies were focused on finding seasonality
or negating it, Fama (1970) proposed Efficient Market
Hypothesis which states that asset prices in financial
markets should reflect all available information; as a
consequence, prices should always be consistent with
‘fundamentals’. Fama et al (1969) defined Efficient
Market as a market which ‘adjusts rapidly to new
information’. Later the definition was modified that asset
prices in an efficient market ‘fully reflect all available
information’ (Fama 1991). This implies that the market
processes information rationally, in the sense that
relevant information is not ignored, and systematic errors
are not made. As a consequence, prices are always at
levels consistent with ‘fundamentals’ (Beechey et al.
2000). According to this hypothesis, security prices reflect
fully all the information that is available in the market.
Since all the information is already incorporated in prices,
a trader is not able to make any excess returns. This
hypothesis was considered one of the most intellectual
and advanced contribution to the field of asset market
and particularly asset market. However The intellectual
dominance of the efficient-market revolution has more
been challenged by economists who stress psychological
and behavioral elements of stock-price determination
and by econometricians who argue that stock returns are,
to a considerable extent, predictable(Malkiel 2003). If the
market are fully rational then crisis of 2008 could not have
spoiled the stock market show much. Malkiel analyses
25
 Prastuti: Vol. 4, No. 1, July 2015
that many predictable patterns seem to disappear after
they are published in the finance literature. As Schwert
(2001) points out, there are two possible explanations for
such a pattern. One explanation may be that researchers
are always sifting through mountains of financial data.
Their normal tendency is to focus on results that
challenge perceived wisdom, and every now and again, a
combination of a certain sample and a certain technique
will produce a statistically significant result that seems to
challenge the efficient markets hypothesis. Alternatively,
perhaps practitioners learn quickly about any true
predictable pattern and exploit it to the extent that it
becomes no longer profitable.
It is evident from the literature review that extensive
study has been done in stock markets individually across
the world and comparatively between two countries or
among developing and developed nations for different
periods of the time. This study compares the stock market
returns from American and Indian stock market for a span
of 20 years spanning 1995 to 2014. US markets are
probably the deepest and most competitive financial
markets in the world, so they provide a favourable testing
ground for testing seasonality and compare it with Indian
stock market. Apart from using data of longer time period
for validating the findings of comparative study originality
of this comparative study lies in segregation of data in pre
and post global stock market crisis. The research paper
tries to visualise if there are any pattern of seasonal
behaviour in S&P 500 and S&P CNX Nifty and if observed
any will test the statistical significance of the same on the
empirical data. Here, researcher will also try to observe if
there is any impact on seasonality pattern after the period
of crisis. By doing this we can also examine whether the
seasonality which is persistent in long term exists in
recent past as well or not.
Objectives
• To examine the presence of seasonality in S&P 500
and CNX 500.
• To establish the presence of Day-of-the-week effect
in S&P 500 and CNX 500.
• To establish the presence of Month-of- the-year
effect in S&P 500 and CNX 500.
• To compare the difference in the pattern of
seasonality before and after the period of recession
in S&P 500 and CNX 500.
26
Data and Methodology
This study uses historical data of Standard & Poor's 500
(S&P 500) index from United States of America and CNX
500 index for a period of total 14 years. Daily data for S&P
500 index has been taken from Yahoo Finance and data for
CNX 500 has been accessed from NSE India. Data has been
segregated in two periods: 1st prior to recession, 2001-
2007 and 2nd after the crisis period, 2009-2015. Firstly,
the returns have been shown in the form of Graphs of
“Day of the Week” data and then “Month of the Year”
data to depict if any seasonality can be observed.
Secondly, the ones which can be observed from the
pictorial representation are tested for statistical
significance.
To analyse the existence of seasonality we calculate the
Returns as Rt=(Ln(Pt)-Ln(Pt-1))*100 where Rt is the
return in period t, Pt is the closing prices at time t and Pt-1
is the closing prices at time t-1 for both the indexes and
both the time periods. Then to statistically test the
significance we execute the t test for the ones visible in
the graphs.
To fulfill the objective mentioned above we need to form
hypothesis.
Hypothesis for testing the existence of seasonality in the
day of the week effect before and after the recession
period will be:
H(1,0)a: The presence of seasonality in the days of the week
effect is not significant prior to the Recession.
H(1, 1)a: The presence of seasonality in the days of the week
effect is significant prior to the Recession.
H(1,0)b: The presence of seasonality in the days of the week
effect is not significant after the Recession.
H(1, 1)b: The presence of seasonality in the days of the week
effect is significant after the Recession.
Hypothesis for testing the existence of seasonality in
month of the year effect before and after the recession
period will be:
 Presence of Seasonality in Stock Market: A Reference from India and US

H(2,0)a: The presence of seasonality in the month of the year Analysis

effect is not significant prior to the Recession.
H(2,1)a: The presence of seasonality in the month of the year
effect is significant prior to the Recession.
H(2,0)b: The presence of seasonality in the month of the year
effect is not significant after the Recession.
H(2,1)b: The presence of seasonality in the month of the year
effect is significant after the Recession.
To test the hypothesis derived above we will follow the
above methodology and start our analysis in the next part
of the research.
Firstly, Examination of seasonality has been done for S&P
500 and CNX 500 for the period prior to Recession.
Analysis of seasonality is done for S&P 500 first and then
checked whether the same persists in CNX 500 or not. As
discussed earlier, first graphs have been plotted where
the data is divided on the basis of trading days of the
week. Figure 1 (a) and (b) shows the average return on
S&P 500 and CNX 500 respectively, for the days of the
week. A relatively high level of return on Wednesday as
compared to any other day for S&P 500 can be observed
from the Figure 1(a). But any such effect cannot be seen in
the CNX 500. The persistence of Monday effect given in
literature cannot be seen in any of the two indices.

Daily Returns Daily Returns

0.1 0.1

0.05 0.05
0

Wednesday

Thursday
Tuesday

Friday
0
Monday
Wednesday

Thursday
Tuesday

Friday
Monday

-0.05
-0.05
-0.1
-0.1 -0.15

(a) S&P 500 (b) CNX 500

Figure 1: Day of the Week Effect prior to the period of Recession

After this, t test is done to test statistically whether the days of the week or not. Table 1 shows the results of the t
return for Wednesday in S&P 500 is higher than other test.

Table 1: Results of t test for returns on Wednesday for S&P 500

Day Monday Tuesday Wednesday Thursday Friday P-Value

Mean -0.00575 -0.01972 0.090192 0.053243 -0.05328 0.072

Std Dev 1.125356 1.064843 1.093048 1.020268 0.965036

Results in table 1 show that the returns on Wednesday in significance the p value of 0.072 says the null hypothesis
the data taken for the study are not statistically higher that there is no significant difference in the returns of the
than any other day in the week. For a 95% level of days of the week is accepted. To reject the null hypothesis

27
 Prastuti: Vol. 4, No. 1, July 2015

that the returns on Wednesday are statistically higher
than other days of the week the p-value should have been
less than 0.05.
Now Day of the Week Effect after the period of Recession
is analyzed for both the indices. No such observation
where the returns are higher as compared to the other
days of the week can be seen in S&P 500 from the graph.
But a good difference can be observed in CNX 500 on
Wednesdays. There is a difference in the pattern of
seasonality of both the indices after the recession period.
There was no such pattern for CNX before the crisis and no
such pattern remained for S&P 500. It can also be
observed that both of them show a pattern on
Wednesdays only.

Daily Returns Daily Returns

0.15 0.3
0.1 0.2
0.05 0.1
0 0
-0.1

(a) S&P 500 (b) CNX 500

Figure 2: Day of the Week Effect after the period of Recession

Now we move on to test the observation made in the results for higher returns on Wednesday are positive.
above representation. As mentioned above, if the level of There is a pattern of higher returns on Wednesday after
confidence is 95% we need to have a p value of less than the period of Recession in CNX 500.
0.05. And it is seen in the table below. Therefore statistical

Table 2: Results of t test for returns on Wednesday for CNX 500

Day Monday Tuesday Wednesday Thursday Friday P-Value

Mean -0.08437 0.07254 0.209372 0.069459 0.017382 0.049675

Std Dev 1.144512 1.134317 1.638312 1.216539 1.161289

Second phase of our research focuses on finding a pattern returns for both S&P 500 and CNX 500. Also, A seasonal
of Seasonality in any particular month of the year. For pattern of higher returns in October and November
which we first plot the returns for every month. Now from followed by a negative returns in September for the
the graphs we can depict a very strong pattern of similar period prior to Recession.

28
 Presence of Seasonality in Stock Market: A Reference from India and US

Monthly Returns Monthly Returns

0.20 0.20

0.10 0.10

0.00 0.00

September
February

December
November
October
January
February

December
November

August
September

March

June
July
August

April
May
March

October
January

June
July
April
May

-0.10 -0.10

-0.20 -0.20

(a) S&P 500 (b) CNX 500

Figure 3: Month of the Year Effect prior to the period of Recession

Now to test the statistical significance of the seasonality CNX 500 are not statistically significant. But the returns
observed above we apply the t test to the monthly returns for the month of November are higher than any other
of the year. It can be seen from the results that higher month of the year in both the indices.
returns for the month of October for both S&P 500 and

Table 3: Results of t test for returns on October and November for

S&P 500 and CNX 500 before the period of Recession
Months Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Mean 0.02 -0.09 -0.04 0.07 0.06 -0.06 -0.04 -0.02 -0.10 0.14 0.13 0.03
S&P
Stdev 1.07 0.92 1.19 1.12 0.96 0.92 1.33 1.07 1.23 1.21 0.96 0.78
Mean 0.04 -0.09 -0.04 0.07 0.06 -0.06 -0.04 -0.02 -0.10 0.14 0.13 0.03
CNX
Stdev 1.04 0.92 1.19 1.12 0.96 0.92 1.34 1.07 1.23 1.21 0.96 0.78

P value October November

S&P 0.071 0.044
CNX 0.079 0.052

Here it can also be said that both the indices are so graphs, different pattern of higher returns can be
correlated or dependent on each other that they show observed although. S&P 500 shows higher returns in the
almost same pattern in the return for every month. month of March and July. Also, for CNX 500, a pattern of
higher returns is observed in the month of March, April,
The pattern for monthly returns changed after the period May and September.
of recession, no similar result can be seen in the following

29
 Prastuti: Vol. 4, No. 1, July 2015

Monthly Returns Monthly Returns

0.20 0.30
0.20
0.10
0.10
0.00

September
February

December
November
0.00

October
January

August
March

June
April

May

July
September
February

December
November
October
January

August -0.10
March

June
April

May

July

-0.10 -0.20

(a) S&P 500 (b) CNX 500

Figure 4: Month of the Year Effect after the period of Recession
Results of the Statistical Test tell us that pattern for the of March, April and September for CNX 500. The reason
S&P 500 is not statistically significant. But Statistical for the same should be settlement of taxes around this
significance is present in the higher returns in the months time.

Table 4: Results of t test for returns on October and November

for S&P 500 and CNX 500 after the period of Recession
Months Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Mean -0.07 0.07 0.18 0.12 -0.06 -0.02 0.16 -0.05 0.08 0.09 0.09 0.11
S&P
Stdev 1.18 1.19 1.44 1.09 1.23 1.19 0.96 1.47 1.06 1.17 1.08 0.81
Mean -0.09 -0.07 0.23 0.21 0.23 0.10 0.03 -0.06 0.27 0.09 0.01 0.00
CNX
Stdev 1.41 1.20 1.28 1.16 1.99 1.28 1.20 1.23 1.12 1.01 1.12 0.97

P value March July

S&P 500 0.136486 0.089803
March April May September
CNX 500
0.000 0.038 0.109 0.008

Conclusion evidence could be seen for the prominence of seasonality

in day of the week or month of the year effect after the
It may be concluded from the above analysis that there period of Recession. When compared with CNX 500
are evidences for the presence of seasonality in case of returns in S&P 500 are relatively low. Therefore from this
India in CNX 500 especially for the period of 7 years after analysis, it can also be said that US markets are more
Recession. Statistically significant abnormal returns are efficient as compared to Indian markets as there are no
observed on Wednesday when compared to any other abnormal returns due to any reason prominent in the
day of the week. The persistence of Wednesday effect is market. Also, looking at this picture it can be said that
also present in literature, which means the results of the “one follows the other” phenomena which is present in
paper are in direction of literatures only. Also, a the literature is present in the month of the year effect of
prominent March and April Effect has been observed for S&P 500 and CNX 500 for US and Indian markets. In other
CNX 500 due to the Season of Tax settlements around the words, there is common month of the year effect shared
year. A two digit rate of return is seen in both the by the two nations. There is dominant pattern of common
prominent effects is seen. In case of S&P 500 no such seasonality.

30
 Presence of Seasonality in Stock Market: A Reference from India and US
Also, as it can be seen that no prominent seasonality is
present for US Markets and once the markets are
Efficient, it can be validated by the research that the
postulation by Burton G. Malkiel that such apparent
patterns were never sufficiently large or stable to
guarantee consistently superior investment results and
certainly such patterns will never be useful for investors
after they have received considerable publicity stand
true.
Bibliography
• Beechey, Meredith & Gruen, David & Vickery, James,
2000. "The Efficient Market Hypothesis: A Survey,"
RBA Research Discussion Papers rdp 2000-01,
Reserve Bank of Australia.
• Dash, Mihir and Sabharwal, Mohit and Dutta,
Anirban (2011), “Seasonality and Market Crashes in
Indian Stock Markets”, Asian Journal of Finance &
Accounting, Vol. 3 (March 14, 2011) pp.174-184.
• Cross, F. (1973). The Behavior of Stock Prices on
Fridays and Mondays. Financial Analysts Journal,
Nov.–Dec. 1973, 67–69.
• Fama, E. F. (1970), "Efficient Capital Markets: A
review of Theory and Empirical Work." Journal of
Finance 25, 383-417
• Fama, EF (1991), “Efficient Capital Markets: II”,
Journal of Finance, 46(5),pp 1575–1617.
• Malkiel, B. G. (2003). “The efficient market
hypothesis and its critics”. Journal of economic
perspectives, 59-82.
• Persons Warren M., The Review of Economics and
Statistics, Vol. 1, No. 2 (Apr., 1919), pp. 139-181.
• Sasidharan, Anand, (2010), Does seasonality persists
in Indian stock markets?, MPRA Paper, University
Library of Munich, Germany, http://EconPapers.
repec.org/RePEc:pra:mprapa:24185.
• Schwert, G. William (2001), “Anomalies and Market
Efficiency,” in G. Constantinides, et. al., Handbook of
the Economics of Finance, North Holland.
• Stefanescu, Razvan and Dumitriu, Ramona and
Nistor, Costel (2009): Investigation about the
presence of the day - of - the - week effect in the
Bucharest Stock Exchange. Published in: The
Proceedings of the 15th International Conference
“The Knowledge-Based Organization”, Sibiu 26-28
November 2009 , Vol. 3/2009, No. Economic Sciences
(19. November 2009): pp.164-169.
• Wachtel, S.B. (1942), “Certain Observation on
Seasonal Movement in Stock Prices, ”Journal of
Business, Vol. 15, pp.184-193
31
A Case of Establishing Brand:
Faridabad Heena
Dr. Bindu Agrawal*

Abstract
This case talks about the journey of Faridabad Heena to be established as retail brand in Faridabad region. The Faridabad Heena started as a
retail Brand in the Delhi NCR market. Faridabad Heena is struggling with the tuff market competition at national level. This is a case of small scale
business with 10 to 15 million annual turnover and 4 to 5 million per unit. The second generation entrepreneur Mr. Suresh Gupta and Mahesh Gupta
both are commerce graduates and inherited this business from their father who started it in year 1982 with the name S. M. Gupta. They pursued that
business as supplier of Heena. They used to provide the basic product to large players dealing into cosmetic and beautification products. The supply
was done in sacks of relatively larger quantity like 40 kg, 10 kg, 5 kg etc. At that time cultivation of Heena was based at Faridabad. This case is a real
example of how a second generation entrepreneur thought of branding its normal product and taking it to the heights of established retail brand. This
case also highlights that most of the times, entering a new international markets is not a subject of preference but of necessity to remain competitive in
new or established markets. Our case is going to analyze the possibilities that a company has when entering a foreign market. It is learning to all
Business managers, entrepreneurs and management students who want to start their business in domestic market and are exploring their career in
international market.

Keywords: Branding, Opportunities, Competition, International marketing and Marketing strategies

A New Journey Started Existing Products Range

They entered in retail business in 2006 with the
registration of Partnership firm. Two brothers Suresh
and Mahesh run this business. Elder brother Suresh
handles production and Mahesh looks after marketing
part. Both are energetic and innovative. Their major
buyers are Nature Essence, Shehnaz, Ayur and small
dealers. Their major operational and supply area
revolves around Delhi and NCR, Himachal Pradesh and
Uttrakhand. Now their raw material comes from
Rajasthan where the cultivation of Heena takes place.
Their main line of business is processing and packaging
of Heena. Two of their plants do the processing and one
in packaging.
Presently they are dealing various product ranges in
order to cater the need of different customers. Their
journey of products in the year of 2006 started with
Rachnee Menhadi that used to come in cloth packaging.
Thereafter, they introduced herbal Heena in small packs
of 30 gm 40 gm, 50 gm. Menhadi cone and Black Heena
(hair dye) were new additions to their existing product
line.
Domestic Market Scenario
The market is shared by many strong competitors like
Neha Menhadi, Mayuri Menhadi and Black Rose
Menhadi. In view of the changing market preferences
from artificial to natural herbal products there are few
who maintain the originality. Real herbal takes pride in

*Associate Professor, Manav Rachna College of Engineering, Faridabad

32

offering their high quality herbal products at competitive
price. They have been successful in maintaining their
quality standards which has motivated them to shift from
being a wholesale supplier to a retail brand of their own.
Strategies for Survival
1) Diversification Strategies
• Market expansion: Presently they are working
through a mediator in International market as a
bulk supplier. The growth prospects in the
international markets; particularly in foreign
countries like Dubai, Bangladesh and Turkey are
very good. They first want to establish a brand
in domestic market and want to spread it
internationally in a time span of three to five
years.
• Product expansion: In order to cater to the
needs of customers they are planning to
introduce heena paste for hair coloring and
black heena.
• New Distribution channels: Faridabad Heena
also plans to widen the distribution network
through increase in the number of dealers and
distributors in Delhi NCR.
2) Promotional Strategies
• Branding is one of the strategies by which
Faridabad Heena will distinguish their product
offerings from competitors. The purpose of
branding they think will create a distinct
offering that is superior to those offered by
their competitors. The products that they plan
to put forward will be meant for a well-defined
set of customers, and provide them with a
compelling reason to buy.
• Repositioning of the existing products by
creating a new set of usages of their existing
range of products. They want to transform their
market position by change in consumer’s
tastes. This is required in case of their products
that have become exhausted, perhaps because
it’s original market has matured or has decline.
• Innovative packaging that gives a fresh look and
will be suited for common man in media like FM
radio and newspapers.
A Case of Establishing Brand: Faridabad Heena
Challenges Ahead
• Need to adopt aggressive marketing strategies:
They have to reach the customers through wider
marketing tactics.
• Pricing strategies: They are charging very nominal
price for their existing product range which
ultimately hamper their aggressive growth.
Future Prospects
They want to span the business in International market
and NCR Delhi region. They know that Herbal Heena has a
very attractive market in Gulf countries, Bangladesh,
Turkey and other Asian countries. Venturing beyond their
own borders will provide potential for numerous benefits
as they will enter the global marketplace. According to Mr.
Gupta, global trade and international business holds
numerous opportunities for their company and they are
willing to take the time to learn how to adequately
prepare for and then enter foreign markets. This stands
true considering the fact that many of the barriers to
these international opportunities have been declining in
recent years, as evidenced by the number of major
companies in this sector have gone international.
Objective of The Case Study
1. To understand the domestic market scenario of
herbal heena.
2. To evaluate the diversification and promotional
strategies adopted by Faridabad Heena.
3. To understand the expansion method adopted by
the company for international market.
Teaching Notes
This case can be used in the classroom for discussion as an
outside project work and as an examination case. The
case is best used as a team assignment. This can be of help
in teaching of marketing strategies adopted by a company
for domestic market and venturing in international
market.
33
 Prastuti: Vol. 4, No. 1, July 2015
Case Study Issues
This case addresses the following issues:
1) Strategies to survive in domestic market
2) Problem faced while branding a product
3) Venturing into international market
Questions
Q1. Is Mr. Gupta going on the right track? What are the
probable changes that would have to be made to
their existing marketing strategies?
Q2. What kind of problems that they are facing in
branding their products in Heena and cosmetic
segments?
Q3. Emphasize the need of Branding for survival and the
strategies they can adopt?
34
Q4. Identify potential areas that may create risks or
impact their efforts in entering and succeeding
overseas market.
References
The information used in this case was majorly compiled
from an interview with Mr. Suresh Gupta, Faridabad
Heena.
• http://www.rejournal.eu/Portals/0/Arhiva/
JE%2027/JE%2027%20-%20Belu%20Caragin.pdf
• http://www.wintranslation.com/wp-content/
uploads/Going_Global_white_paper.pdf
• http://smallbusiness.chron.com/global-marketing-
vs-multidomestic-marketing-23528.html
• http://smallbusiness.chron.com/four-product-
expansion-strategies-13367.html
• http://www.statcan.gc.ca/pub/11f0027m/
2012078/part-partie1-eng.htm
Grievance Handling in Ranbaxy:
A Case Study
Dr Kanchan Bhatia*
Dr Shweta Mittal**

Abstract
The maintenance of quality work-life is the biggest challenge for any organization today. The failure to meet the standards would generate
grievances among the employees and would have a bearing upon the harmonious relationship in the workplace. Broadly, a grievance can be defined as
any discontent of dissatisfaction related to organizational matters. It can be real or imaginary, rated or unvoiced, written or oral.

A grievance is any alleged violation of the contract, past practice, employer rules, previous grievance or arbitration settlements, or violation of
any such law. An employer is under an obligation to state in the terms and conditions of employment, the details of the person concerned to whom any
employee who has a grievance may approach.

Every organization strives to establish an excellent working environment. This would further facilitate increased employee morale and a better
performance and thus help an organization to achieve its goals. Grievance handling procedure in Ranbaxy is my topic of research .In this I am going to
discuss about the various aspects related with the grievances of the employees, their satisfaction level with the grievance handling procedure being
followed by the company, The satisfaction level towards the working arrangement, practices and methods used to solve grievance in the company, etc.

Introduction number of factors like work rule or regulation, policy or

According to the International Labour Organization (ILO)
a grievance is:
“A complaint of one or more workers with respect to
wages and allowances, conditions of work and
interpretation of service stipulation, covering such areas
as overtime, leave, transfer, promotions, seniority, job
assignment and termination of service.”
Every employee contributes his level best in the
performance of an organisation and in return has certain
expectations from the organisation he is working for. The
failure of fulfillment of an employee’s expectations give
birth to discontent and dissatisfaction. This discontent or
dissatisfaction is known as grievance.
The workplace grievances may arise because of a
procedure, contract, health and safety regulation,
interpersonal relationships, unfair treatment, wage,
bonus, changing the cultural norms unilaterally etc.
Maintaining quality of work life for its employees is an
important concern for the any organisation. The
grievance handling procedure of the organisation can
affect the harmonious environment of the organisation
It is beneficial to resolve these grievances, before it is too
late. In this respect the role of the management can not
be ignored. The management should make an effort to
understand the problems and issues of the employees
and resolve them amicably. This would also help in
building a culture of high performance. Managers need
to be educated about the importance of the grievance
process and their role in maintaining favorable relations
with the union.

*HoD, MBA, Sagar Institute of Research & Technology (SIRT), Bhopal

**Associate Professor, IMR Ghaziabad.

35
 Prastuti: Vol. 4, No. 1, July 2015
The need to resolve these grievances cannot be ignored
upon. Effective grievance handling is a crucial aspect of
cultivating good employee relations and running a fair,
successful and productive workplace. It should be kept in
mind that relationship building is key to successful labour
relations.
The organisations should make an effort to establish such
an environment that may lead to an increased employee
morale and performance which may further contribute to
the productivity of the organisation.
Company Profile
Ranbaxy Laboratories Limited, India's largest
pharmaceutical company, is an integrated, research
based, international pharmaceutical company, producing
a wide range of quality, affordable generic medicines,
trusted by healthcare professionals and patients across
geographies. Ranked 8th amongst the global generic
pharmaceutical companies, Ranbaxy today has a
presence in 23 of the top 25 pharmaceutical markets of
the world. The Company has a global footprint in 48
countries, world-class manufacturing facilities in 10
countries and serves customers in over 125 countries.
Literature Review
The revolt of English barons in the early thirteenth
century which led to the Magna Carta of 1215 was partly
motivated by grievances against abuses by King John.This
right to petition the king, for grievances, was affirmed in
the bill of rights 1689.
The United States declaration for independence is mainly
an enumeration of the colonists' grievances against King
George III. The right "to petition the Government for a
redress of grievances" is recognized in the first
amendment to the United States government.
As ‘grievance’ is an abstract term, defining it distinctly is
therefore rather difficult. Different authors have defined
the word grievance in various ways. For example, Davis
defines it as “any real or imagined feeling of personal
injustice which an employee has concerning his
employment relationship.
36
On the other hand, Yoder and Staudohar have defined
grievance as a written complaint filed by an employee and
claiming unfair treatment. In the view of Jucius the term
“grievance” means “any discontent or dissatisfaction,
whether expressed or not and whether valid or not,
arising out of anything connected with the company that
an employee thinks, believes or even feel, is unfair, unjust
or inequitable”
The grievances of the employees are related to the
contract, work rule or regulation, policy or procedure,
health and safety regulation, past practice, changing the
cultural norms unilaterally, individual victimization, wage,
bonus, etc. Grievance procedures are a means of dispute
resolution that can be used to address complaints by
employees against management or to settle disputes
between a company and its suppliers, customers, or
competitors.
Since the evolution of this term, a number of researches
have been conducted to map the impact of grievances on
various factors in the workplace. Grievances should be
solved in the lateral stages, as and when they arise before
they take some major form and also to order to avoid any
severe condition that may take place.
Some researches have also proved that grievance
procedures do not necessarily have to be so formal and
elaborate, and in fact, overly formal grievance procedures
often discourage the airing of disputes in a timely manner.
Though some of the studies have also proved that at times
employees hesitate to come up with their grievances as
they feel it would act against them or they often view
these grievance handling mechanism as biased towards
the employee
In general the nature of grievance falls under the given
categories in most Indian organizations, however it may
vary from organisation to organisation:-
i. Promotions
• Supersession
• Acting Promotion
• Seniority
• Pay Fixation
 Grievance Handling in Ranbaxy: A Case Study

ii. Compensation Population and Sample: For the purpose of study, the
• Increments population is the employees of the Ranbaxy (both
• Payment Mohali-I and Mohali-II)
• Recovery of Dues
The sample size is 50.
iii. Amenities
• Inequitable Distribution Data Collection Method: Survey method was used to
• Entitlement collect data.
• Medical Benefits
Research Instrument: Questionnaire was used. It was
iv. Service Matters both open and close-ended in nature.
• Transfers
• Continuity of Service Sample Technique Simple random sampling is being used
• Superannuation in this project.

v. Disciplinary Action The hypothesis for the study would be:

• Punishment Ho: There is no significant effect of proper grievance
• Fines handling mechanism on the performance of employees.

OBJECTIVES H1: There is a significant effect of proper grievance

1) To study the procedure being followed in Ranbaxy to
solve employee grievances.
2) To study the nature of grievances that occur in the
organisation.
3) To know whether the grievances were being solved
or not.
4) To study the methods and practices used to solve the
grievances.
5) To measure the effect of proper grievance handling
on the performance of the employees.
6) To measure the satisfaction level of the employees
towards the grievance handling methods.
Research Methodology
Research methodology is a way to systematically solve the
research problem. It may be understood as a science of
studying how research is done scientifically.(Kothari
1998)
The research used in this project is descriptive.
handling mechanism on the performance of employee.
Interpretation of Results and Findings
HO: There is no significant relationship between the age-
group and the satisfaction level with the grievance
handling procedure.
H1: There is a significant relationship between the age-
group and the satisfaction level with the grievance
handling procedure.
Here, the significance level .701 > than 0.05.Hence,HO is
accepted. Therefore, there is no relationship between
age-group and satisfaction level.
Summary and Conclusion
Every organisation has realized the importance of
resolving grievances in an effective manner. A grievance
can be defined as any sort of dissatisfaction, which needs
to be redressed in order to bring about the smooth
functioning of the individual in the organization.

Descriptive Research After the analysis of the primary data, that was being
The major objective of descriptive research is to describe collected for this topic, it was found that age-group has no
something usually market characteristics or functions. significant influence on the satisfaction level of the
employees with the grievance handling mechanism in the

37
 Prastuti: Vol. 4, No. 1, July 2015
organisation. This itself makes it clear that grievance can
occur at any age and at any time irrespective of the tenure
of the service in an organisation.
Most of the employees are satisfied with the grievance
handling mechanism of the organisation, but a majority
still opines that it can be further improves for the
betterment.
A large number of the employees also agreed to the point
that the management should pay more attention towards
the problems of the employees. This would be beneficial
for both employees and the organisation.
Most of the employees are satisfied with the response of
the HR department towards the grievance of the
employees. However, some are dissatisfied also. So, the
HR department needs to sort out this issue also.
The employees also feel that grievance details need to be
documented by the organisation, for further utilization of
the same. Most of them also feel that their immediate
supervisor are competent enough to handle their
grievance and there is no such immense need for their
further training.
It was also evident that a large number of employees are
fully satisfied with the lighting system, medical facility,
canteen facility and the quality of the food that is being
offered there.
The employees also have a different opinion about their
working hours, some of them are satisfied with it and
some showed some kind of unhappiness with it. Similar is
the case with respect to the leave granting system.
It was also being found that the employees are happy with
the training procedure that is being designed for the
workers of every module. This is a good sign for the
organisation.
One interesting fact that was found ,was that the lack of
proper grievance handling has a bearing upon the
performance of the employees. This aspect should always
be taken care of as an individual’s performance is linked
with that of the organization’s.
Hence, it can be said that, grievances handling is a key
driver of employees satisfaction. Though grievances may
38
arise because of intra-personal problems of individual
employees and union practices but it should be controlled
effectively for betterment of the organization.
Recommendations
1) The management should devise strategies to
manage younger, male, more educated and more
skilled employees because these are employees
who are most likely to file grievances.
2) There is a need of a proper grievance handling cell in
the organisation, for speedy redressal of an
employee’s grievance.
3) The absence of proper two-way flow of
communication can indeed be a fertile ground for
breeding grievances. So there should be a proper
communication system in the organization.
4) The employees also suggested the hr policies of the
organization to be updated.
5) The performance appraisal also needs to be worked
upon.
6) An open door policy can also be implemented.
Bibliography
• Dale S Beach : Personnel Management, Macmillan
Publishing Company, New York, 1965.
• Dessler Gary and Varkkey Biju (2009) Human
Resource Management, 11th Edition, Pearson
Prentice Hall.
• Edwin B Flippo: personnel Management, Richard
Irwin , Ilinois. 1917
• Malhotra Naresh K. (2008) Marketing Research, 5th
edition
• Monappa Arun (2000) Industrial Relations, 7th
Edition, Tata Mc Graw-Hill
• Mirza S Saiyadain: Personnel Management, Tata
McGraw Hills, New Delhi 1997
• Ratnam Venkata C.S (2006) Industrial Relations, 2nd
Edition, Oxford University Press
• S Chandra: Grievance Procedure: A survey of
Practices in Industries in India. Hyderabad
JOURNAL
• Ganapathi R. and Balaji Prasad M.(2008) “Effects of
Working Environment on the Performance of
Executives”, Asia-Pacific Business Review, Volume IV,
No. 3, pp 117-123.
 Grievance Handling in Ranbaxy: A Case Study

• Matlay Harry (1999) “Employee Relations in the

Firm”, Employee Relations, Volume 21, No.3, pp 285-
295.

TABLE 1
AGE * Satisfaction level with the grievance handling procedure Crosstabulation
Count
Satisfaction level with the grievance handling procedure
low level of moderate level of
extremely low level satisfaction and satisfaction and high level of
of satisfaction and moderately neither agree nor satisfaction and
strongly disgaree disagree disagree strongly agree Total
AGE 20-30 0 2 5 12 19
30-40 1 1 4 7 13
40-50 1 1 3 4 9
50-60 1 0 0 3 4
ABOVE 60 0 1 0 4 5
Total 3 5 12 30 50

TABLE 2
Chi-Square Tests
Value df Asymp. Sig. (2-sided)
a
Pearson Chi-Square 9.023 12 .701
Likelihood Ratio 11.696 12 .470
Linear-by-Linear Association .004 1 .953
N of Valid Cases 50

a. 17 cells (85.0%) have expected count less than 5. The minimum expec ted count is .24.

39
The Influence of Consumers Past Use Experience on
Consumer Attitude: A Comparative Study between
Metro and Nonmetro City
Dr. Naval Bajpai*
Dr. Utkal Khandelwal**
Dr. Amit Khandelwal***

Abstract
Present study is an attempt to measure the impact of consumer’s past use experience on attitude formation along with a comparative study
between metro and non metro cities consumers in India. Since, Metro and non-metro customers are different in their consumer behaviour in many
ways. Linear regression and z-test was used to measure the impact of these attributes on consumer attitude and difference in metro and non-metro
customers respectively.

Study identified eight different antecedents of consumer past use experience through literature and then developed a simple model of consumer
past use experience for the study. The result revealed that consumer past use experience in formation of positive consumer attitude found high in metro
city as compare to non-metro city. Regression result between consumer attitude and consumer past use experience clearly explained that the higher
level of consumer reference provide higher level of positive consumer attitude among customers of both the metro and non-metro city. Marketers have
to understand the various components of consumer past use experience in order to enjoy the substantial competitive and economic advantages.

Keywords: Consumer learning, Price sensitivity, Buying behaviour, Trust, Word-of-mouth communication.

Introduction Consumer have different attitude towards new products

In the present era every marketer is try to develop the
best product for their target customers but it is not gives
the surety of the success, every company still makes
mistakes in meeting the expectations of today’s
customers, who tend to be more demanding and less
loyal than ever before. Marketers are under intense
pressures to increase market share, improve margins
and differentiate their products in the marketplace.
However the most influential part of all these process is
consumers’ past experience. Every customer linked their
previous experience of product, service, brand and
other marketing dimensions with current purchasing.
Thus, it becomes an important phenomenon for the
research (Wulf et al., 2001; Gronroos, 2000; Doney and
Cannon, 1997).
and those of which they use earlier. At the time of
purchasing the product consumers attitude towards
that particular product are affected by their previous
experience with that product or service. Consumer past
use experience is purely the attitude play at the time of
repurchasing of particular product. Many studies
indicating that the accumulation of use experience is an
important determinant of consumer attitude (Ghen and
Liu, 2004, Doney and Cannon, 1997). Smith and Park
(1992) stated that products can be divided into (a)
product use experience and (b) product availability for
visual evaluation. They found that when products were
characterized under product experience, consumers
were tending to utilize their experience of the core-
brand during product quality evaluation on frequency,
actual purchase behaviour and satisfaction after use. Jun
et al. (1999) concluded that utilizing experience when

*ABV-Indian Institute of Information Technology & Management Gwalior Morena Link Road, Gwalior (MP) India
**IBM, GLA University, 17 Km. Stone, NH#2 Mathura-Delhi Road, Chaumuha, Mathura (UP) India
***Govt. Polytechnic College, Morena (MP) India
40
 The Influence of Consumers Past Use Experience on Consumer Attitude: A Comparative Study between.....
evaluating a high-tech brand is helpful to enhancing
attitude towards products. This conclusion clearly states
the utility of previous experience in forming attitude. As
such, this study first try to find out the factors affecting
consumers past experience, its impact on consumer
attitude and comparative study of understanding the
same in metro and non metro customers. Metro and non-
metro customers are different in their consumer
behaviour in many ways this should be justify by various
previous research. Joshi and Mishra (2011) find that
awareness level of the respondents is higher in the
metros as compared to the non-metros in India. Datt &
Sundharam (1990) explain the similar phenomenon
which justifying the results of this study. They explain, one
of the serious problems facing India's economy is the
sharp and growing regional Imbalances among India's
metro and non-metro regions in terms of per capita
income, poverty, availability of infrastructure and socio-
economic development. Thus, the aim of this research is
1. To find out the factors affecting consumer’s past use
experience.
2. To measure the impact of past use experience on
consumer attitude.
3. To find out the difference in degree of past use
experience and its impact on consumer attitude in
metro city and non-metro city.
Theoretical Framework
Past use experience become more important when
products are not available for the physical evaluation for
the customer. For example in online purchasing, previous
experiences play a prominent role. Huang et al. (2011)
finds in their research that attitude toward online
auctions, perceived behavioural control and past related
experiences significantly and positively influence the
intention to purchase on online auctions, whereas
subjective norm does not have such influence.
Additionally, past related experiences have a positive
effect on perceived behavioural control. Similarly if we
have examine the previous research on satisfaction and
service quality has shown that customers’ past
experience with a firm can influence their affective and
behavioural responses to the present meet. Many
researchers have shown that past satisfaction has a
significant impact on current satisfaction (LaBarbera and
Mazursky, 1983). Similarly, Bolton and Drew (1991) found
that prior attitudes have a direct impact on current
customer attitudes (i.e. overall quality). In the similar
arena, Zeithaml et al. (1996) showed that previous service
quality has a significant influence on customer loyalty,
switching intentions, and complaint intentions across
several different service and product situations.
Literature also clears that past experience are not only an
important determinant of services but also affect product
and market. Many researchers suggest that previous
information or experience provides underlying reasons
for repeat purchase or brand switching decisions (Inman
and Zeelenberg, 2002). Whenever consumers are going to
purchase either services or product their previous
experiences play a vital role in repeat purchasing. In
Hoch’s (1996) opinion, product experience credibly
influences consumer behaviour because a consumer’s
personal experience with a product subtly affects their
beliefs and ‘draws the consumer in’
There are various theories as well as models of consumer
attitude in the past such as theory of planned behaviour
and theory of reasoned action which were not involving
the past experience as an indicator of consumer attitude.
Moreover, Ajzen’s (1991) model did not include past
behaviour as a predictor. However, Klein’s (1998) model
proposed that prior experience with internet shopping is
a noteworthy predictor of behaviour. In attempting to
integrate such past findings, this research integrated the
TPB with the effects of past related experiences, including
past online shopping experience (Ranganathan and Jha,
2007) on the intention to purchase via online auctions.
The results are potentially valuable to managers
interested in selling their products via online auctions by
helping to ensure their offerings are more congruent with
the determinants of customer choice.
Consumers Past-Use Experience: An Exploration
through Literature
For developing consumers past use experience model it is
important to identify factors which affect consumer past
use experience. Based on literature following are some of
the factors on which risk aversion is dependent.
Customer emotion has been regarded as a principal
element in understanding perceptions of past
experiences. When customers assess a specific
consumption experience, they often draw on their
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 Prastuti: Vol. 4, No. 1, July 2015
current emotional state (Isen and Shalker, 1982). Since
emotion constitutes a primary source of human
motivation and exerts substantial influence on the
thought processes (Westbrook and Oliver, 1991), a
positive emotion is likely to lead to a positive reaction and
less critical thinking when making judgments (Barger and
Grandey, 2006).
Inertia is described as a condition where repurchasing
behaviors occur on the basis of situational cues, and it
reflects a non-conscious process (Huang and Yu, 1999). It
clearly seems that repurchasing behaviour is depending
upon situational cues but these situational cues are
generated from some similar kind of past behaviour.
Inertia is also characterized as a habitual attachment that
is to a large extent unemotional and convenience driven
(Gounaris and Stathakopoulos, 2004). Inert customers
are used to avoid making new purchasing decisions
(White and Yanamandram, 2004), avoid learning new
service routines and practices, and avoid making price
comparisons (Pitta et al., 2006). Verhoef (2003) found
that past behaviours explain the largest part of the
variance in customer loyalty. Actually, past behaviours in
the relationship might represent the inertia effect (Rust et
al., 2000), and it strengthen that inertia is one of the
important variable to understand past experience with
respect to consumer attitude.
Word of mouth is an oral communication passing through
the individuals. This is one of the greatest tools used by
the marketer. The impact of this toll is either negative as
well as positive. If customer is satisfied or dissatisfied, he
passes the information to the others and it help in
formation of experience with the product whether this
experience gain by the personal experience or through
the word of mouth. Hess (2008) found that an excellent
firm reputation (compared to average) leads to greater
repurchase intentions and lower negative word of mouth
intentions. Nikbin et al. (2011) conclude in their research
that customers past experience with the firm influence
their behavioural responses, thus when the customers
perceive that their service provider is progressive,
innovative, flexible, customer oriented, pleasant and
trustworthy, their repurchase intention and positive word
of mouth will increase.
Customer’s emotions are also play an important role in
forming the experience with the product and services
42
because it is the general phenomenon of psychology that
if you are experiencing positive emotions than you are
seeing the better side of the coin. Gardner (1985) suggest
customers who experience positive emotions tend to see
the bright side of things and are more willing to return.
Such customers return in order to experience positive
emotions linked to hedonic values (Jang and Namkung,
2009). Furthermore, Nyer (1997) found people in positive
emotions are more willing to engage in positive word of
mouth, while Baker et al. (1992) reported customers
experiencing more positive emotions are more willing to
make a purchase.
Consumers encountered various experiences in dealing
with products and services, but in terms of learning there
is a different scenario because consumers did not learn
every experience in dealing with product and services. A
multitude of studies has inspected how individual
consumers learn what to consume (Keillor et al., 1996).
Many of these studies are based on the establishment of
social learning theory, which proposes that individuals
learn general behaviours and attitudes from past
experiences. Previous research has established that these
learning experiences may be vicarious, indicating that
consumers learn or model behaviours, values, attitudes,
and skills through the observation of other individuals, or
through observations of electronic or print media
(Bandura, 1977).
Price sensitivity is the degree to which the price of a
product affects consumers purchasing behaviours. The
degree of price sensitivity varies from product to product
and from consumer to consumer. There are various
studies who may confirm that price sensitivity is the
strong determinant of consumers past experience
because consumers are highly affected by price
(Anderson, 1996). These studies confirm that a
relationship exists between consumers’ post-purchase
experience and subsequent price-sensitivity, and
whether before or after, purchase experience will affect
price sensitivity. However there is another group of
thinkers who believes that with experience of a product,
the consumer becomes more knowledgeable as to its
quality and value (Zeithaml, 1988) consequently when a
consumer better understands the value of the product,
they are more sensitive to changes in value (e.g. if the
price were to increase), which may affect the intention to
purchase (Reicheld, 1996).
 The Influence of Consumers Past Use Experience on Consumer Attitude: A Comparative Study between.....
Subjective norm is the perceived social pressure to
engage or not to engage in behaviour. Drawing an analogy
to the expectancy-value model of attitude, it is assumed
that subjective norm is determined by the total set of
accessible normative beliefs concerning the expectations
of important referents. So, it helps in measuring the
impact of society on individual’s behaviour. The
subjective norm is intended to measure the social
influences on a person’s behaviour i.e., family members
expectations (Ha, 1998). Therefore including the
subjective norm in measures of repeat purchase should
lead to more accurate estimates of consumer repurchase
behaviour (Ha, 1998). Indeed the opinions of family and
friends are reported to influence an individual’s attitude,
intentions and behaviour (Ajzen and Fishbein, 1980).
'Trust' indicates a depth and a sense of assurance that is
based on strong but not logically conclusive evidence, or
based on the character, ability, or truth that someone or
something has shown over time or across situations. Trust
makes for a sense of being safe or of being free of fear,
enough so that one's focus can be on other matters
because that matter is taken care of. Scholars studying
consumers’ behaviour often use trust as the surrounding
concept that mediates the relationship between a
consumer’s attitude toward these brand features and
consumer loyalty (Wiener and Mowen, 1986). Chaudhuri
and Holbrook (2001) state that beliefs about reliability,
safety and honesty are all important facets of trust that
people incorporate in their operationalization of trust.
Research Methodology
For measuring the influence of consumer past use
experience (CPUE) on consumer attitude and comparison
of the same in metro and non-metro consumers a
theoretical model is organized. Methodology for
achieving the research objectives can be broadly
explained by understanding theoretical model, framing
hypotheses; sample and sample profile; tool and design
of the study. A detailed description of all these are as
follows:
Conceptual model of Consumer past use experience
It is very important for any research to conceptualize the
thought and therefore, a conceptual or theoretical model
is generated for conducting the study. In this model, eight
variables of consumer past use experience are drawn
from marketing dimension through extensive literature
survey by the researchers. These eight variables have
straight impact on CPUE, explained in theoretical
framework. Literature clearly reveals that these eight
variables are antecedents of consumer past use
experience. Figure-1 demonstrates this proposed model
of measuring Consumer past use experience.
Research Question and formation of Hypotheses
In the light of existing literature, the following research
questions are framed:
1. There exists a different degree of impact of
consumer past use experience on consumer attitude
in metro and non-metro city.
2. Consumer past use experience is influencing
consumer attitude in both in metro and non-metro
city.
For measuring the statistical significant difference
between impacts of consumer past use experience on
consumer attitude, main hypothesis was constructed. In
addition to this, one hypothesis was constructed to
measure the linear impact of consumer past use
experience on consumer attitude level of metro
consumers. Additionally, one hypothesis was also
constructed to measure the linear impact of consumer
past use experience on consumer attitude level of non-
metro consumers. These three hypotheses are as follows:
H1: There is no significant difference in the degree of
consumer past use experience in metro and non-metro
city.
H2: Consumer past use experience has no significant linear
impact on consumer attitude of metro city.
H3: Consumer past use experience has no significant linear
impact on consumer attitude of non-metro city.
Sample and sample profile
Subject of the present study were the consumer visited to
various shops and malls in metro and non metro city.
Sample drawn for metro city constitutes the consumers of
National capital region of India i.e. New Delhi and sample
drawn for non-metro city non-metro city constitutes the
consumers of Gwalior and Mathura region of India.
Convenient (Non Probability) sampling technique is used.
Individual respondent was the sampling element.
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 Prastuti: Vol. 4, No. 1, July 2015

Sample Profile
Subjects of the present study were selected from the
various stores and malls of metro and non-metro city.
Total 250 subjects were selected from each metro and
non-metro city and given the same questionnaire, in
which, respondents indicated their opinion about
marketing dimension in both the city (i.e. metro and non-
metro city). Questions are shown in appendix.
Tool
It has already been discussed that the present study is
focused on the measurement of degree of difference in
the influence of consumer past use experience on
consumer attitude level of a metro and non-metro
consumers. Consumer past use experience is measured
through eight independent variables. These eight
variables were collected through extensive literature
survey. Based on the literature, each question in the
questionnaire was constructed and each question
explained each variable. These variables was measured
using a five point Likert scale ranging from ‘strongly
disagree’ to ‘strongly agree’ with ‘neither agree nor
disagree’ as the middle point. Internal consistency of the
scale was checked and Cronbach’s alpha was found to be
0.77.
Content validity technique was used to check the validity
of the scale adopted for the study. Researchers
systematically evaluated how well the content of a scale
represents the measurement test at hand. Due to the
subjective nature of this technique we also used a more
sophisticated technique referred to as criterion validity.
For measuring the difference between means of metro
and non-metro consumers, z-test for two populations was
employed. Z-test was applied on summated score of the
data collected through the scale. In addition, for
measuring the linear impact of consumer past use
experience on consumer attitude in metro and non-
metro city, simple regression technique was employed.

M C
A O
Customer emotions N
R
S
K U
Inertia
E M
T E
Word-of-mouth communication R
I
N P
Positive Emotions Experience A
G
S
Consumer Learning Experiences T
D
I U
M Price Sensitivity S
E
E
N Subjective Norms E
S X
I P
Trust
E
O
R
N I

Figure 1: Proposed model of Consumer Past-use Experience to test

the difference between Metro and Non-metro city
44
 The Influence of Consumers Past Use Experience on Consumer Attitude: A Comparative Study between.....

Data Analysis and Interpretation
Data analysis was done using MS Excel software. Analysis
was done using three steps: z-test (at 5% level of
significance) for comparing means of two population;
regression for measuring linear impact of consumer past
use experience on consumer attitude in metro and non-
metro city. Z-test result is presented in table 1 and
regression results are presented from table-2 to table-7.
Following section focuses on these 7 tables and their
statistical interpretation:

Table 1: z-test for comparing two means (consumer past-use

experience) in Metro and Non metro city

Consumer Past-use Experience Consumer Past-use Experience

(Metro city) (Non-metro city)
Mean 30.268 29.184
Known Variance 9.68 8.24
Observations 250 250
Hypothesized Mean Difference 0
Z 4.048836914
P(Z<=z) two-tail 5.14728E-05
z Critical two-tail 1.959963985

For finding out the significant difference in means of Table 2: Regression Statistics for Consumer
metro and non-metro city in terms of consumer past-use Attitude and Consumer Past-use
experience z-test between two populations is applied. Experience in Metro city
Calculated z value is coming as 4.05 which falls in the
rejection region (at 5% level of significance). This indicates Regression Statistics
rejection of null hypothesis and acceptance of alternative
Multiple R 0.98807532
hypothesis in case of H1. Hence, null hypothesis of no
difference is rejected and alternative hypothesis of R Square 0.976292837
significant difference is accepted. Hence, it can be Adjusted R Square 0.976197244
concluded that there is a significant difference between
degrees of consumer past-use experience (at 95% Standard Error 0.480083209
confidence level) between metro and non-metro city. Observations 250
Sample result clearly exhibit that mean of metro city is
slightly higher than non-metro city. Hence, it can be
significantly concluded that influence of consumer past-
use experience on consumer attitude level in metro city
are slightly better (mean=30.27) than non-metro city
(mean= 29.18).

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 Prastuti: Vol. 4, No. 1, July 2015

Table 3: ANOVA table for Consumer Attitude and Consumer Past-use Experience in Metro city
Degree of
freedom Sum of Square Mean Square F Stat Significance F*

Regression 1 2353.884988 2353.884988 10212.97351 1.565E-203

Residual 248 57.15901216 0.230479888

Total 249 2411.044

*F stands for F-test

Table 4: t-value and p-value for the regression result between Consumer Attitude
and Consumer Past-use Experience (CPE) in Metro city

Coefficients Standard Error t Stat P-value

Intercept -1.14218594 0.312289158 -3.65746268 0.000311059

CPE 10.39246491 0.102835358 101.0592574 1.565E-203

Regression analysis is statistical procedure for analyzing
associative relationships between dependent variables
and independent variable (Malhotra & Dash, 2010). Since
our one of the objectives is to find out the impact of
consumer past use experience (CPUE) on consumer
attitude. Therefore, researchers established two
hypotheses H2 and H3. Our eight variables representing
CPUE explored through the literature are the
Independent variables and consumer attitude is the
dependent variable for the regression analysis in order to
find out the impact of CPUE on consumer attitude.
Table 2 exhibits the regression statistics for consumer
attitude and (CPUE) in Metro city. R2 (coefficient of
determination) demonstrates the strength of association
between eight variables of CPUE (independent variables)
and consumer attitude (dependent variable). In other
words, R2 signifies the proportion of the total variation in
dependent variable (CPUE) by the variation in
Independent variable (Consumer attitude). R2 value is
coming as 97.6% which is an indication of strong predictor
model because 97.6% of the total variation in CPUE is
accounted for by the variation in consumer attitude in
metro city. Standard error is relatively low indicates the
small amount of variation or scatter around the
regression line. Table 3 exhibited that F-value, while
developing a regression model to predict the consumer
attitude with the help of the eight independent variable
(CPUE), we need to focus on few measures. Total variation
(Sum of Squares Total) can be partitioned into two parts:
The first part of variation, which can be attributed to the
relationship between independent variable and
independent variables, is referred to as explained
variation or regression sum of squares. The second part of
the variation, which is unexplained can be attributed to
factors other than the relationship between independent
and dependent variables and is referred to as error sum of
squares (Bajpai, 2011). Table 4 exhibits t-value and p-
value for testing the slope of the regression model.
Significant p-value corresponding to t-value is an
indication of linear relationship between dependent
(consumer attitude) and independent variable
(Consumer Past-use Experience) in metro city. Here
significant F value and P-value are less than 0.05 rejects
the hypothesis (H2) and exhibits overall significance of
regression model. Hence, there is a significant impact of
CPUE on consumer attitude in metro city.

46
 The Influence of Consumers Past Use Experience on Consumer Attitude: A Comparative Study between.....

Table 5: Regression Statistics for Consumer Attitude and Consumer

Past-use Experience in Non-metro city
Regression Statistics
Multiple R 0.969032413
R Square 0.939023817
Adjusted R Square 0.938777945
Standard Error 0.710221556
Observations 250

Table 6: ANOVA table for Consumer Attitude and Consumer

Past-use Experience in Non-metro city
Degree of
freedom Sum of Square Mean Square F Stat Significance F*
Regression 1 1926.441165 1926.441165 3819.16174 1.1959E-152
Residual 248 125.0948353 0.504414659
Total 249 2051.536

*F stands for F-test

Table 7: t-value and p-value for the regression result between

Consumer Attitude and Consumer Past-use Experience (CPE) in Non-metro city

Coefficients Standard Error t Stat P-value

Intercept 6.015882328 0.37757387 15.93299431 7.76828E-40
CPE 8.013322382 0.129666739 61.79936682 1.1959E-152

Table 5 exhibits regression statistics for Consumer
Attitude and Consumer Past-use Experience in Non-
metro city. R2 value is coming as 93.9% which is an
indication of strong predictor model because 93.9% of the
total variation in CPUE is accounted for by the variation in
consumer attitude in non-metro city. Standard error is
relatively low indicates the small amount of variation or
scatter around the regression line. Table 6 shows that F-
value is significant which exhibits overall significance of
regression model. Table 7 exhibits t-value and p-value for
testing the slope of the regression model. Significant p-
value corresponding to t-value is an indication of linear
relationship between dependent (consumer attitude)
and independent variable (Consumer Past-use
Experience) in non-metro city. Here significant F value and
P-value are less than 0.05 rejects the hypothesis (H2) and
exhibits overall significance of regression model. Hence,
there is a significant impact of CPUE on consumer attitude
in non-metro city.
Discussion and Implications of the
Study
Based on the previous researches regarding consumers
past use experience, this study shows the clear link and its
precise degree between consumers’ past use experience
and their attitude, which helps readers deeply
understand the relationship between these fields.
The Findings support the view points that: positive past
use experience of consumers leads to positive consumer
attitude. Consumers purchase decision or repurchase
decision are highly affected by past use experience. Table

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 Prastuti: Vol. 4, No. 1, July 2015
2, 3, 4 and Table 5, 6, 7 exhibits the result of regression
(linear) between consumer attitude and consumer past
use experience in buying decision for metro and non-
metro city. Regressions results between consumer
attitude and consumer past use experience in purchasing
decision clearly explain that the higher degree of positive
past use experience provide higher level of positive
consumer attitude among customers of both the metro
and non-metro city. This outcome complies with Doney
and Cannon (1997), Klein’s (1998) model for internet
shopping, Anderson and Narus, (1990). Doney and
Cannon (1997) did their study in service marketing, they
explain that customers tend to behave and make
purchasing decision depending on their previous
consuming experiences. Similarly Klein (1998) Model
suggests that prior experience with internet shopping is a
significant predictor of Consumer attitude and Anderson
and Narus, (1990) did their study over the customer
expectations. This study add to these previous study
through the precise degree of impact between past use
experience and consumer attitude. Tsur (2007), explain
that when consumers are not fully aware of the value of a
good, they use their experience to estimate its value.
Their past experience is selective if it only contains
transactions that were carried out but not potential
transactions that were not implemented. This statement
clearly shows the importance of past experience in buying
decision. In addition, Wu Li-Wei (2011) finds past-use
experience as a zone of tolerance in consumer. This zone
of tolerance is differing in metro and non- metro
customers. The results show that a wider level of the zone
of tolerance strengthens the positive effect of inertia on
customer loyalty, while also reducing the positive effect of
satisfaction. The results also indicate that the negative
moderating effect of the zone of tolerance on the
relationship between satisfaction and customer loyalty
will reduce as alternative attractiveness increases. In
contrast, the positive moderating effect of the zone of
tolerance on the relationship between inertia and
customer loyalty will reduce as alternative attractiveness
increases. The important variables in order to exploit past
use experience are customer satisfaction, consumer
inertia, word-of-mouth communication, positive
emotion experiences, learning experiences, price
sensitivity, subjective norms and trust.
Considering the work of Berman & Thelen, (2004), single
marketing strategy may not be applicable to every
48
multichannel retailer due to the diversity in prior in-store
shopping experience and attitude. Therefore, this study
measures the degree of impact of past use experience in
purchasing and repurchasing decision. Since the
consumers of metro and non-metro consumers are
different so as their social and psychological variables.
The degree of impact of past use experience in purchasing
or repurchasing decision was found different in metro and
non-metro cities. This result reveals from Table 1, which
clearly shows that impact of consumer past use
experience in buying decision is high in metro city as
compared to non-metro city. The reason can be explained
as degree of awareness and education makes the
consumer more attentive in terms of purchasing is high in
metro regions.
Conclusion
Retaining customers has become a major objective of any
marketing organization. Marketers are adopted various
strategies for the same. Consumers positive experience
with the consumption of the product are considered to be
essential for building long-term relationship with
customers in order to achieve mutual benefits of all
parties. Therefore, this study was conducted to exam the
impact of consumer’s past use experience on attitude.
The findings of the survey can be summarized as below:
• Customer’s emotion, inertia, word-of-mouth,
consumer learning, positive emotion experience,
price sensitivity, subjective norms and trust are the
important variable in formation of consumer past
use experience.
• The impact of consumer past use experience in
buying decision is high in metro city as compared to
non-metro city.
• Consumer past use experience is undoubtedly a
prerequisite of consumer attitude towards buying
decision.
Limitations of the study
Though we have taken all possible steps to provide the
findings in a holistic way but as a natural phenomenon of
any research present study is also not free from some
limitations. A list of limitations observed on the present
study is given as below:
1) The purpose of this research was to study the impact
of consumer past-use experience on attitude
 The Influence of Consumers Past Use Experience on Consumer Attitude: A Comparative Study between.....
formation and comparative study of the same
between metro and non-.metro cities. Due to time
constraint we could not have catered more metro
and non-metro cities. Therefore, the results of this
study are not confirmatory as such but rather they
give an idea in order to formulating the marketing
policies.
2) The literature review for this study concentrated on
the theoretical fields of consumer attitude and
consumer psychology in general. Based on literature
in these fields, a research framework was
constructed. This laid a question that consumer
display different attitude to the different types of
product and services.
3) Sampling technique used is this research is
convenient sampling technique, which is non-
probability sampling technique and therefore not
providing a true picture of the population.
4) The analysis of difference in consumer attitude in
metro and non-metro city and linear impact as well
are based on eight variables extracted from the
literature. So, the results are based on these eight
variables only.
5) For analyzing the data, the statistical design used in
this research gives the broader picture of the results.
Results indicate the degree of difference between
consumer attitude of metro and non-metro
consumers and linear impact of the various variables
under study on consumer attitude. Study is not
providing the comprehensive picture of the data.
6) Another major limitation based on sampling that this
research was conducted on limited size of
population.
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Appendix
i. Emotions play a prominent role in my purchasing.
ii. My purchasing is depending upon some situational
cues based on my past experience.
iii. I am sharing my marketing experiences with others.
iv. More positive emotion an individual’s attitude
towards the brand of the product, the greater their
intention to repurchase the brand.
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by family and friends
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trustworthiness of the brand.
51
Corporate Governance: Is it an Effective
Panacea for ensuring Corporate Ethics?
Dr. Ankit Saxena*
Prof. Anand Mohan Agrawal**

Abstract
Recent events advocate the fact that there is continuous decline in the ethics and values as far as States and corporate are concerned. This
signifies that there is flaw in system of governance. Corporate Governance refers to the system through which the behaviour of a company is monitored
and controlled.

This paper endeavors to explore the effectiveness of current corporate governance framework in ensuring corporate ethics. In this paper, with
the help of various scholarly works in recent past, it has been tried to explore significance of corporate governance in corporate functioning, pros and
cons of corporate governance and the probable solution to enhance the effectiveness of corporate governance

It has been derived that good corporate governance, adds to competitive advantage, leads to high firm value and fair pricing of shares, yields
positive market price reaction, preferred by investors. Fundamental shortcomings of corporate governance framework revolve around implications in
real implementation, lack of quality corporate governance practices, problem of dominant shareholders, Distortion in Managerial pay-offs,
Divergence from prescribed code, and even Hurting the overall economic growth.

Some of the imperatives for strengthening corporate governance framework comprises of orientation towards investors’ protection, improving
national standards of regulation to the best, obtaining optimum level of transparency, reducing information asymmetry, enhancing role of media, and
controlling managerial distortion resulting from stringent regulation.

Keywords: Corporate Governance, Dominant Shareholders, Managerial Pay-Offs, Investors’ Protection, Information Asymmetry.

Preamble Corporate Governance refers to the system through

Change is the order of the day. Recent development in
the field of science and technology has tremendous
impact on our way of living. Similarly, globalization and
liberalization has also significant impact over the
business methodology as well. Today, entire business
spectrum is undergoing a phase of change. There are
significant changes in the environment, culture and
ethics of the business system. Recent events advocate
the fact that there is continuous decline in the ethics and
values as far as States and corporate are concerned. This
signifies that there is flaw in system of governance. This
scenario has lead to the debate on the concept of
Corporate Governance.
which the behaviour of a company is monitored and
controlled. The significance of Corporate Governance is
that in modern economies large corporations are
typically associated with a division of labour between
the parties who provide the capital (i.e., shareholders)
and the parties who manage the resources (i.e.,
management). Conflict of interest between the two
groups might lead to insufficient monitoring of the
executive, suboptimal levels of investment in the firm, or
some shareholders being expropriated. In these
scenarios shareholders might be hurt if there are not
sufficient means to ensure that the company is properly
monitored. In short Corporate Governance can be
defined as “the effective management of relationships

*Assistant Professor, Institute of Business Management, GLA University, Mathura

**Director, Institute of Business Management, GLA University, Mathura

52
 Corporate Governance: Is it an Effective Panacea for ensuring Corporate Ethics?

with integrity to produce enhanced company • What can be done to enhance the effectiveness of
performance”. corporate governance?

Corporate Governance deals with laws, procedures, Evolution of Corporate Governance

practices and implicit rules that determine a company’s
ability to take managerial decisions vis-à-vis its claimants:
in particular, its shareholders, creditors, customers, the
State and employees. There is a global consensus about
the objective of ‘good’ Corporate Governance:
‘maximizing long-term shareholder value’. Since
shareholders are residual claimants, this objective follows
from a premise that, in well performing capital and
financial markets, whatever maximizes shareholder value
must necessarily maximize corporate prosperity, and best
satisfy the claims of creditors, employees, shareholders,
and the state; all aiming at ensuring ethical code of
conduct in corporate affairs. The horizons of Corporate
Governance have been expanding with the development
of strong regulatory framework along with the growing
awareness about the requirement of sound Corporate
Governance practices in a company.
Objective and Methodology
This paper endeavors to explore the effectiveness of
current corporate governance framework in ensuring
corporate ethics. There is not any doubt the theoretical
contribution of corporate governance in enhancing
corporate ethics. However, the asymmetry and
divergence in recent times have made it necessary to
revisit the tenet. In this paper, with the help of various
scholarly works in recent past, it has been tried to explore
that
• What is the significance of corporate governance in
corporate functioning?
• How does corporate governance help a company?
• What are the shortcomings of current corporate
governance framework?
The form of governance has kept changing from time to
time, and the process is still not over. Though the terms
governance, good governance and corporate governance
are gaining momentum in business spectrum more in
recent times, it is obvious to know that the concept of
governance is not a new one. In fact, the concept of
governance is as old as human civilization. Few historical
evidences of it can be traced below:
• Manu, the son of Prajapathi was the first king who
brought out a comprehensive code of conduct or
governance for men, society and the state as a whole
in his treaty called Manu Dharma Shastra.
• In Mahabharata, while Bhishma delivered his first
formal disclosure on polity, he says in ambivalent
terms that the king should always prioritize interest
of his subjects over that of his own.
• The great political thinker of 3rd century BC namely
Kautilya in his treaty Arthasastra has laid down the
ideals at which the king was expected to aim.
• In eastern literature a good society is one wherein a
high, ethical standard of life is characterized by the
pursuit of wealth, employment and liberation. It is
the prevalence of dharma, which characterizes an
ideal society. Such a society is possible if the
governance of the country is based on clear, efficient
and effective administration and all the rulers aim at
this goal in the ancient times.
In last century there were significant developments in
Corporate Governance due to a number of events and
their respective responses. The summary of such events
and their respective responses have been illustrated
ahead:

Table 1: Characteristics of Corporate Set-up & Counter-Response

Timeline Characteristics Response
1950s The Era of Excessive Managerial Power The Trustbusters
1960s and 1970s The Age of Conglomerates The Hostile Takeover
1980s The Rise of Insider Trading The Stock Option Boom
1990s CEO Pay: Nowhere to Go but Up Shareholder Activism
2000s The Age of Scandal The Downsized CEO

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 Prastuti: Vol. 4, No. 1, July 2015
Relationship of Corporate Governance and Corporate
Ethics
There is a well sought theoretical relationship between
corporate ethics and corporate governance. Due of
dilution of ownership in corporate structure, it has been
observed that managers have been indulged in practices
which lead to substantial harms to not only to
shareholders but also to stakeholders at large. Corporate
governance emerged as a mechanism requiring
companies to exhibit their functional aspects which gives
stakeholders an insight of what is happening in within the
internal domain of companies.
Major concerns for corporate ethics in last few decades
have been
• Insider Trading
• Corporate Scandals
• False (overstated / understated)
Financial Statements
• Information Symmetry
• Dominance of family-owned business
• Divergence from requisite legal framework
As a result, the concept corporate governance was coined
to make sure that companies exhibit ethical functioning.
However, as regulators frame a way to reach the diverging
entities, diverging entities keep coming with new
mechanisms of divergence. Hence, in practical the
corporate governance framework needs to be robust
enough to ensure no opportunity of any divergence.
Significance of Corporate Governance
Corporate governance is the need of the hour. Some
people argue about the relevance of the mechanism
which is not utterly effective in achieving for what is
meant for. However, one needs to understand that any
robust system doesn’t evolve overnight. The significance
of corporate governance can be illustrated with the
following points:
• Number and scope of corporate collapses in recent
times clearly illustrates that corporate accountability
practice is failing to match the rhetoric, even when
regulatory enforcement is being mandated by law
and enforced by criminal and civil penalties (Sarre,
2002). Corporate scandals have increased in number
as well as their extent has expanded manifold, which
gives a prime rationale for having a more robust
corporate governance framework.
54
• Providing for penal provisions in not enough. With
the discovery of massive frauds in the Indian as well
as International capital markets, regulators and
legislatures have increasingly turned towards
making Corporate Governance standards mandatory
and have attached penalties to violation of these
Corporate Governance ‘guidelines’ (Parekh, 2003).
But it is important to understand someone, who is
not ethical, doesn’t care for law and attached penal
provisions as well. Such people always seek a
justification for their code of conduct and power of
money make them over-confident for finding a way
to escape from so-called penal provisions.
• Corporate governance can act as way of identifying
that something is wrong in the corporate set-up. It
has found that in the year before fraud detection,
fraudulent firms exhibit governance weakness, such
as the percentage and number of outside directors,
the number of audit committee meetings, the
number of financial experts on their audit
committees, the quality of the external audit firms,
the proportion of firms with the combined CEO-chair
position, and the percentage of block-holder
ownership (Farber, 2005). Even it has been observed
that after fraud detection, corporate governance
move towards the established codes more vigilantly.
So stakeholders if being rational and sensitive to
corporate governance indicators, it can give them an
insight of a probable scandal.
• Effective corporate governance can reduce
corruption. Empirical evidences indicate that
companies with good corporate governance in
practice are less involved in unethical conduct.
Corporate Governance is among the important
factors determining the level of corruption and
Corporate Governance standards can have profound
impacts on the effectiveness of the global anti-
corruption campaign (Xun, 2005). However, some
big companies (Enron, WorldCom, Tyco, Satyam)
have been found in corporate scandals, which have
added to questions to relevance of the framework.
However, tenet remains valid in most circumstances.
• Shareholder activism has made it inevitable. At
present, shareholders’ awareness level is increasing
and institutional as well as individual investors are
 Corporate Governance: Is it an Effective Panacea for ensuring Corporate Ethics?
giving significant weight to corporate governance
which has created an implicit pressure on board of
directors to adhere with the good governance
norms. If directors do not show leadership on
Corporate Governance reforms, investors will;
Boards that embrace reform may well reap a trust
premium, while those that continue to ignore the call
for change will be serving neither management nor
shareholders well (Felton, 2004).
What companies gain from Good Corporate
Governance?
Companies exhibiting the good corporate governance
practices tend to reap out advantages as they are
perceived as ‘responsible’ companies. These can be
Various benefits a company derives from adhering to
good corporate governance norms are as follows:
• Good corporate governance adds to competitive
advantage. In current competitive scenario, a firm's
strategic transparency is heavily related with its
relative market position as well as the degree of
competitiveness it can achieve. One of the common
factors that determine the success of Corporate
Governance structure is the extent to which it is
transparent to the market forces within particular
institutional arrangements (Eldomiate et. al., 2005).
• Good corporate governance leads to high firm
value. Stakeholders feel positive for the firm who
exhibit the requisite governance practices. Now
companies are focusing on value maximization
rather than profit maximization because maximizing
value of firm provides them a sustainability quotient.
Both company-level as well as country-level
Corporate Governance play a significant role in
understanding when risk management is associated
with higher value as risk management is one channel
through which stronger Corporate Governance
translates into higher firm value (Allayannis et. al.,
2007).
• Now a days various independent agencies provide
ranking to companies’ governance. Stakeholders
also seek to have higher transparency so that they
can be assured that their interest is protected and
company is moving in the desired direction. Firms
scoring higher in governance and transparency
rankings are more greatly valued in the stock market
(Durnev & Kim, 2004). Firms with low governance
rankings may as yet have an unrecognized and
inherent equity gain that could attract potential
investors who wish to engage with the board to
improve the firms’ adoption and disclosure of
governance principles that would be recognized by
the market and create increased demand positively
affecting equity values (Walker, 2013).
• Good corporate governance leads to fair pricing of
shares. It becomes obviously easier to market
participant to go into details of pricing equations of
shares. Mispricing of share is a desirable state
neither for investors nor for company. Share
mispricing, which is more exogenous and market
determined is a simple but effective measure of
Corporate Governance as shares of good
governance companies are less mispriced compared
to bad governance companies (Marisetty &
Vedpuriswar, 2001). Hence, it becomes inevitable for
companies to ensure that their governance doesn’t
lead to mispricing of shares and making firm more
prone to market volatility.
• Good corporate governance yields positive market
price reaction. Now Indian capital market is gaining
efficiency, where investors have started reacting to
price sensitive information. Corporate governance
being a prime investors’ protection vehicle has a
strong weight in terms of market price reaction.
Companies which are doubtful in terms of
governance are given negative market reaction. The
market price reaction is positive and significant
when a firm announces its decision to commit to
greater transparency and minority shareholder
protection and the liquidity impact of improved
governance is also positive since trading costs
decrease after incorporation into the differentiated
segments (Chavez & Silva, 2006). Thus, it can be
derived that stock exchanges can play a critical role in
leading, but obviously not with the weak investor
protection regulation.
• Good corporate governance companies are
preferred by investors. Besides, other traditional
yardsticks of investment decision making, now
corporate governance has also emerged as an
important indicator for investment decision. Nobody
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 Prastuti: Vol. 4, No. 1, July 2015
wants to put hard-earned money at stake by
investing the same in company with poor
governance. The nature of Corporate Governance in
international investors’ home countries affects their
portfolio choice abroad and therefore that these
investors should not be lumped together in analyses
of their portfolio choice (Kim et. al., 2008).
Shortcoming of Corporate Governance in Indian
Scenario
Inspite of various pros of the concept, corporate
governance has not been truly effective for what it was
meant for. Unless these shortcomings are identified and
sorted out, corporate governance framework cannot
serve the purpose. The key shortcomings can be narrated
as follows, which results in divergence from being ethical.
• Good on paper only. India suffers from bureaucratic
characteristics badly. Good norms are drafted and
equally well implemented on ‘papers only’. Framing
laws and implementing them on paper doesn’t serve
the purpose alone. There has to be good
understanding of the norms as well as intent behind
the norm, otherwise any good legislation becomes a
mere piece of paper responded by another piece of
paper. While on paper the India’s legal system
provides some of the best investor protection in the
world, the reality is different with slow, over-
burdened courts and widespread corruption; mainly
caused by highly concentrated ownership and family
business groups continuing to be the dominant
business model; leading to significant pyramiding
and tunneling among Indian business groups and,
notwithstanding copious reporting requirements,
widespread earnings management (Chakrabarti et.
al., 2007).
• Fundamental shortcomings. Indian companies still
lack quality corporate governance practices, which
needs to be rectified as soon as possible. There are
evidences of ineffectiveness of boards in Indian
companies, the lack of transparency surrounding
transactions within business groups, the divergence
of Indian accounting practices from international
standards, and the changing role of, and controversy
surrounding, institutional shareholders (Banaji &
Mody, 2001).
56
• Less effective in disciplining the dominant
shareholders. The biggest lacuna of corporate
governance framework in Indian scenario is that
most of businesses run in corporate form are family
owned business. This leads to concentration of
ownership leading to creation of minority
shareholders whose protection is at stake in the
process. The problem in the Indian corporate sector
(public sector or the multinationals or private sector)
is that of disciplining the dominant shareholder and
protecting the minority shareholders and this
problem of Corporate Governance abuses by the
dominant shareholder can be solved only by forces
outside the company itself, viz. the regulator and the
capital market (Varma 1997). So far, regulatory
bodies have not been able to come up with
something which can ensure disciplining the
dominant shareholders and ensuring minority
protection.
• Distortion in Managerial pay-offs. In recent days,
managerial pay-offs have been a point of debate.
Sometimes, extremely high managerial pay-offs are
characterized by bad governance companies.
Acharya & Volpin, (2008) has derived that When
firms compete in the managerial labor market, the
choice of Corporate Governance by a firm affects and
is affected by the choice of governance by other
firms. Firms with weaker governance give higher
payoffs to their management to incentivize them.
This behavior forces firms with good governance to
pay their management more than they would
otherwise. This externality reduces the value to firms
of investing in Corporate Governance and produces
weaker overall governance in the economy.
• Divergence from prescribed code. Corporate
legislative framework is very vast, complicated and
overlapping as well. In the process, Companies have
the choice to deviate from their national Corporate
Governance standards by opting into another
system; They can do so via contractual devices - such
as cross-border mergers and acquisitions,
(re)incorporations, and cross-listings - which enable
firms to choose their preferred level of investor
protection and regulation (Goergen & Renneboog,
2008). There is a need to come up with a
comprehensive legislative framework so that this
 Corporate Governance: Is it an Effective Panacea for ensuring Corporate Ethics?
ambiguity can be minimized which exist to
overlapping and contradicting norms.
• Hurting the fiscal revenue. Interestingly weak
corporate governance can also impact the fiscal
earnings of the company. Because when things are
not in order, it takes less than a little to distort things
a bit further but if affects economy badly. In a
scholarly work, it was found that when the Corporate
Governance system is ineffective (i.e., when it is easy
to divert income) or when ownership concentration
levels are high, an increase in the tax rate can reduce
tax revenues generating a corporate version of the
Laffer-curve (Desai et. al., 2004).
How to improve the scenario? : The probable solution
After looking at prominent pros and cons of the corporate
governance at business spectrum, it is equally significant
to explore the probable solution. First and foremost fact is
that developing a robust system is quite dependent on
state of development of economy as well. At a given level
of country investor protection, better governance
mechanisms are more likely to be accepted at the firm
level as a country's financial and economic development
improves (Doidge et. al., 2006). Any system tends to get
robust and comprehensive as and how economic
progression takes place.
Secondly, regulators’ orientation towards investors’
protection is very imperative. A country's legal system has
a significant influence on various aspects of Corporate
Governance, especially the extent to which it protects
investor rights (Denis & McConnell, 2003). SEBI, in India,
has been very vigilant in this regards since its inception.
Recently they have announced that they will come up
with a set of comprehensive guidelines.
Third, Individual countries should first focus on improving
national standards of regulation and corporate practice
rather than attempt to reach a common set of matrices
from the start and when appropriate governance
standards are in place in individual countries, codes of
best practice could then be integrated into a consistent
framework for all countries to develop more regionally
integrated capital markets (Cheung & Chan, 2004).
Without developing a framework which suits entities of a
particular nation and strengthening it to the best, we
cannot dream of integrating norms and coming up with a
universally accepted code of conduct. It has been argued
that globalization should pressure firms to adopt a
common set of the most efficient Corporate Governance
practices, while others maintain that such convergence
will not occur because of a variety of forms of path-
dependence (Palepu et. al., 2002).
Fourth, one of the common factors that determine the
success of Corporate Governance structure is the extent
to which it is transparent to the market forces within
particular institutional arrangements (Eldomiaty & Choi,
2004). Hence, it is vital to pay attention to the desired
transparency from companies. However, there has to a be
a limit but the balance has to be obtained.
Fifth, impact of information asymmetry in building
market discipline needs to be highlighted. Cai et. al.
(2007) has examined the impact of asymmetric
information on three main mechanisms of Corporate
Governance: the intensity of board monitoring, the
exposure to market discipline, and the pay-for-
performance sensitivity of CEO compensation and found
that firms facing greater asymmetric information tend to
use less intensive board monitoring but rely more on
market discipline and CEO incentive compensation. Thus,
corporate governance framework needs to address this
issue as well.
Sixth, Role of media in building market discipline cannot
be avoided. Media has expanded its wings and has a solid
force on corporate as well. Thus, some vehicles can be
figured out where corporate officials can be asked about
the discrepancy as and when it comes in notice. Media
affect companies’ policy toward the environment and the
amount of corporate resources that are diverted to the
sole advantage of controlling shareholders and media
play a very important role to play in pressuring corporate
managers and directors to behave in ways that are
“socially acceptable” (Dyck & Zingales, 2002).
Last, Regulation of large shareholder intervention may
provide better protection to small shareholders, but such
regulations may increase managerial discretion and
scope for abuse (Becht, et. al., 2005). So after drafting
regulations it is equally important to explore that
enhanced regulation should not add to managerial
distortion.
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 Prastuti: Vol. 4, No. 1, July 2015
Concluding Remarks
Thus, it can be concluded that corporate governance has
been a system with positives as well as some underlined
negatives. The disclosure is widely believed to play an
important role in Corporate Governance. However,
disclosure is a two-edged sword (Hermalin & Weisbach,
2008). Increase in transparency by detailed disclosure is
the soul of corporate governance framework. However
there are costs and benefits attached to it as disclosure
can reduce firm profits, raise executive compensation and
increase the rate of CEO turnover.
For developing corporate ethics culture, strong corporate
governance is must. At present companies have adopted
a repetitive format for reporting on corporate governance
merely as a part of annual financial report mainly for
compliance of norms (primarily, SEBI Clause 49). But there
is a need to create an ethical environment which is self
driven as self driven discipline is better than the imposed
one.
Hence, it can be derived that both regulators and
companies need to align a balance between the costs and
benefits of corporate disclosure. However, there is a
strong need to revisit the tenets of corporate governance
and come up with a system which ensures corporate
ethics at work. The more stringent corporate governance
rules will strengthen the system asking companies to
remain ethical in their code of conduct. However, at the
same time, it will also provoke unethical players to find a
new ways of divergence. This is a never-ending web.
Hope, the ethical wins it in the end.
References
• Acharya, V., & Volpin, P. (2008). “Corporate
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Prastuti: Vol. 4, No. 1, July 2015

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