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Corporate governance and social responsibility

Marty Stuebs (Department of Accounting and Business Law, Hankamer School of Business, Baylor University, Waco, Texas, USA)
Li Sun (Department of Accounting and MIS, Collins College of Business, University of Tulsa, Tulsa, Oklahoma, USA)

International Journal of Law and Management

ISSN: 1754-243X

Article publication date: 9 February 2015

Abstract

Purpose

This paper aims to draw on the stakeholder theory to examine the association between corporate governance and social responsibility.

Design/methodology/approach

This paper hypothesized that corporate governance is positively associated with corporate social responsibility (CSR), and good corporate governance also leads to good social responsibility in the following year. Corporate governance was measured by using the corporate governance index provided by Brown and Caylor (2006, 2009). CSR data come from Kinder, Lydenberg and Domini (KLD), Inc.

Findings

Regression analysis documents significant evidence to support a positive association between corporate governance and social responsibility. Evidence suggests that good governance leads to good CSR performance.

Originality/value

The results should interest managers who engage in behavior leading to or maintaining strong corporate governance mechanisms, financial analysts who conduct research on corporate governance and firm performance and policymakers who design and implement guidelines on corporate governance mechanisms. Moreover, results of this study can increase individual investors’ confidence in investing in companies with stronger corporate governance.

Keywords

Citation

Stuebs, M. and Sun, L. (2015), "Corporate governance and social responsibility", International Journal of Law and Management, Vol. 57 No. 1, pp. 38-52. https://doi.org/10.1108/IJLMA-04-2014-0034

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited