Importance of Corporate Governance and Corporate Social Responsibility

Running head: CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
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Author Note

1CORPORATE GOVERNANCE
Executive Summary
The primary aim of the report is to highlight the importance of the relationships which the
organization forms with the different stakeholders like the customers, suppliers and the
employees. This tends to have a positive impact on the shareholder value and contributes
towards the overall wellbeing of the organization. The main aim of the report is to highlight the
manner in which the shareholder value of the firm can be improved upon with special reference
to the corporate governance and the corporate social responsibility.

2CORPORATE GOVERNANCE
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Corporate governance..................................................................................................................4
Theories of corporate governance...............................................................................................6
Corporate Social Responsibility..................................................................................................7
Critical analysis...............................................................................................................................9
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

3CORPORATE GOVERNANCE
Introduction
Corporate Governance can be defined as the manner in which an organization is
governed and the different members of the firm are managed at large. In the same way, the
Corporate Social Responsibility can be stated to be the responsibility of the firm towards the
welfare of the organization at large1. The company is a part of the society and that makes the
company highly responsible for the overall development of the society. The company needs to
take into consideration the impact it leaves on the different stakeholders as well so as to ensure
that it is being able to gain considerable success in the long run. The stakeholders not only
involve those individuals who invest in the firm but also involve those individuals who are liable
to invest in their time and efforts for the company2. These individuals are the employees, the
customers, the suppliers and the general public at large. However, very often the business fails to
do so and the result is that it is unable to enhance the shareholder value. According to Tricker
and Robert (2015) has mentioned that if the business is able to engage in a good relationship
with the different parties like the employees, develop effective relationships with the suppliers as
well as the customers so as to ensure that they will be able to form a good standing in the
business environment.
1 Armstrong, Christopher S., et al. "Corporate governance, incentives, and tax avoidance." Journal of Accounting
and Economics 60.1 (2015): 1-17.
2 Du Plessis, Jean Jacques, Anil Hargovan, and Jason Harris. Principles of contemporary corporate governance.
Cambridge University Press, 2018.