International Journal of Humanities and Social Science

ISSN 2220-8488 (Print), 2221-0989 (Online) 10.30845/ijhss

Investigate and Critically Assess the Dimensions and Importance of the Relationship between Corporate Governance and Corporate Social Responsibility
Pham Thi Huyen Sang

The paper aims at understanding the relation between corporate governance (CG) and corporate social responsibility (CSR). In theory, CG refers mainly to the mechanisms which protect shareholders and other stakeholders and ensure an effective working of the firm, whilst CSR refers mainly to the objective function of the firm and the attention for various stakeholders. The paper discusses these concepts, with particular attention to the relation between CSR and profit maximization. This relation is important to evaluate which actions are truly socially responsible and which actions are simply profit maximization in disguise. The available empirical evidence shows that both CG and CSR are positively related to the market value of the firm. This suggests that in the long run the market mechanism should be able to provide additional resources to those companies which are best at maximizing a widely defined bottom line.

Full Text: PDF