Interlinkage of Theories of Corporate Governance with Corporate Social Responsibility: An Exploratory Study

Abstract

Corporate governance refers to the set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term.

Corporate governance is based on principles such as conducting the business with all integrity and fairness, being transparent with regard to all transactions, making all the necessary disclosures and decisions, complying with all the laws of the land, accountability and responsibility towards the stakeholders and commitment to conducting business in an ethical manner. The Director's just being the guardian of other people's money cannot be expected to guard it as the partners in a private co-partner firm will; therefore the anxiousness of the shareholders is valid while selecting the directors to ensure the responsibility and trust for higher return on investment.

This paper tries to look at a few theories which have their base in economics, trusteeship, Human Rights et al. and that try to resolve the problem of separation of ownership and control and perform social responsibility within business activities.