Corporate governance and social responsibility

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.

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