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Corporate Social Responsibility in a Corporate Governance Framework

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  • Yohanes E. Riyanto

    () (Department of Economics, National University of Singapore)

  • Linda A. Toolsema

    () (Department of Economics, University of Groningen,)

Abstract

We argue that Corporate Social Responsibility (CSR) may affect the agency relationship inside a firm. We analyze how CSR and the threat of stakeholder activism influence effort of manager and shareholder, and describe how CSR may arise endogenously in this context. By engaging in CSR the shareholder can commit to less monitoring, increase the manager’s effort, and raise profits. Even a socially indifferent shareholder may thus benefit from CSR and prefer to behave socially responsibly. He may even find it optimal to sponsor a social activist, giving it the means to exert pressure.

Suggested Citation

  • Yohanes E. Riyanto & Linda A. Toolsema, 2007. "Corporate Social Responsibility in a Corporate Governance Framework," Departmental Working Papers wp0702, National University of Singapore, Department of Economics.
  • Handle: RePEc:nus:nusewp:wp0702
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    File URL: http://www.fas.nus.edu.sg/ecs/pub/wp/wp0702.pdf
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    References listed on IDEAS

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    Cited by:

    1. Katinka C. Van Cranenburgh & Daniel Arenas & Jennifer Goodman & Céline Louche, 2014. "Religious organisations as investors: a Christian perspective on shareholder engagement," Post-Print hal-01067933, HAL.
    2. Emma Sjöström, 2008. "Shareholder activism for corporate social responsibility: what do we know?," Sustainable Development, John Wiley & Sons, Ltd., vol. 16(3), pages 141-154.
    3. Changhui Kang, 2007. "Does Money Matter? The Effect of Private Educational Expenditures on Academic Performance," Departmental Working Papers wp0704, National University of Singapore, Department of Economics.
    4. Jiří Strouhal & Natalja Gurvitš & Monika Nikitina-Kalamäe & Emilia Startseva, 2015. "Finding the Link between CSR Reporting and Corporate Finan-cial Performance: Evidence on Czech and Estonian Listed Com-panies," Central European Business Review, University of Economics, Prague, vol. 2015(3), pages 48-59.
    5. Rekker, Saphira A.C. & Benson, Karen L. & Faff, Robert W., 2014. "Corporate social responsibility and CEO compensation revisited: Do disaggregation, market stress, gender matter?," Journal of Economics and Business, Elsevier, vol. 72(C), pages 84-103.

    More about this item

    Keywords

    Corporate Social Responsibility; Corporate governance; Stakeholder activism.;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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