Corporate Governance And Social Responsibilities Accounting Essay

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This research aims to deconstruct the meaning of social responsibility and provide an understanding of the concept and its relationship with human related issues in the companies' long term success. This study has its focus on the empirical findings that consists case study, annual reports and independent corporate social responsibility reports of companies.


Corporate governance is an issue which has come to the fore recently as a result of problems associated with the recent financial and economic crisis with the likes of Maxwell and Polly Peck in UK, Enron and WorldCom in US to mention a few. It is concerned with creating a balance between economic and social goals with the efficient use of a company's resources to achieve its goals and at the same time maintaining equilibrium between the economy and the society.

Corporate social responsibility is an ethical concept and has a strong international dimension as a result of globalization and the multinational companies now operating on a large scale producing both positive and negative results i.e. economic growth and also damaging the environment. [1] This has led to numerous calls for companies to act in a socially responsible manner, thus, a growing trend that has emerged alongside corporate governance which reflects a changing social attitude in the obligations owed by firms to the societies in which it operates. Social responsibility is comprehensive in nature and applies not only to companies but human activity in general. Its growing emphasis reflects a relationship between the company and stakeholders, investors, suppliers, employees, consumers, indigenous communities and the government. [2] Corporate social responsibility incorporates the human values, code of conducts, respect to minorities and the environment.

CSR is divided into three main aspects; the economic aspects, social aspect, the environmental and ecological aspect. Social aspect of CSR is the newest of the three dimensions and it refers to the management's obligation to make choices and take actions which contribute to the welfare and interests of the society. However, this dissertation will focus on the social aspects of CSR and discuss extensively the responsibility of multinational companies to its employees, customers, corporate citizenship and the community as a whole.

The relevance of the CSR is the central assumption that organizations are social entities whose responsibilities exceed maximizing shareholders' wealth. The standard practice in analysing a company's achievements was reflected in a company's financial statements detailing profits, earnings and dividends. This has changed and companies are now required to account explicitly for all aspects of their performance to include their social, environmental performance and health and safety issues. This tends to boost the reputation of the company explaining the positive link between Corporate social responsibility and a company's general performance thereby strengthening its image and then investors are willing to pay a premium for good governance in business because of the expected improvements in sustainable performance which will, overtime be reflected in future dividend streams. Also, stakeholders such as customers may decide to boycott purchase of goods and services where the activities of the company have political and social repercussions on the community. Creditors' interests are considered in relation to wrongful or fraudulent trading; shareholders and employees, suppliers and distributors both present and future ones would have trust and confidence in the company in a socially responsible company. [3] 

The focus of this paper shall be on the United Kingdom but reference would be made to other jurisdiction for a comparison of the different cultures, values, rules and economic standards existent. A case example would also be analysed for a practical application of the issues discussed.

Specific issues/ questions to be addressed

Can corporations have social responsibilities?

Can corporations be morally responsible for its actions?

Why do companies have social responsibilities and whether these responsibilities promote its own self interest?

Should strategic decision makers be responsible only to shareholders or they have broader responsibilities?

Should national companies be socially responsible to the society as their international counterparts?

Whether corporate social responsibility is the same as business ethics?

To what extent are companies social responsible to shake holders and whether these stakeholders have a reciprocal duty?

What are the main implications of the legal status of corporations for notions of corporate social responsibility?


Corporate governance along with social responsibility play a significant role in the success and failure of a company and the society has become increasingly aware of this. However, investors are willing to invest in socially responsible companies, organizational stakeholders such as present and future employees and shareholders have trust and confidence in such companies. [4] An increasing percentage of corporate value today can be attributed to reputation, goodwill, or benevolence. These attributes are rare and have been achieved by most companies through corporate social responsibility.


Corporate governance and corporate social responsibility is currently an extensively researched topic and despite the impressive number of quality articles, the topic is far from obtaining its aim. The growing rate of multinational companies, changes in economic system and current challenges that has led to scandals and future tendencies still remain at the centre of research. The main objective of this research is to overcome the gap created by a lack of definition of CSR, thereby making it difficult to understand the concept and differentiate it from business ethics. This research gives an in dept understanding of the concept of CSR, it effectiveness making use of Carroll's four part model of CSR [5] namely, economic, ethical, and philanthropic responsibilities.

This dissertation illuminates the emergence and growth of the social aspects of CSR thereby defining the concept and importance of corporate social responsibility; the principles, elements and practices of multinational corporations; the relationship between corporate social responsibility and corporate governance in International business; and suggestions for improving aspects of corporate social responsibility in International business.


This dissertation is divided into three parts and constitutes five chapters. The first part is devoted to background materials and theoretical analysis of the concept of corporate governance and corporate social responsibility. Chapter 1 is the introductory chapter and gives an insight into the whole essay. It gives an outline and background to the concept of corporate governance and corporate social responsibility.

Chapter 2 discusses the trends of corporate social responsibility and its importance to International business and the community as a whole. It states the basic principles, legal and regulatory framework applicable to international business in the context of corporate social responsibility.

The second part is the practical application of corporate social responsibility to International business. Chapter 3 states the basic principles of CSR and how it applies to multinational companies. It discusses the social aspect of CSR and focuses on its relationship with the community and its employees. It also discusses the rights of stakeholders and shareholders and their responsibilities and finally problems of CSR.

The third part deals with the ways of improving corporate social responsibility and a review of a number of case studies illustrating CSR. Chapter 4 gives an overview of the developing state practices and various international initiatives of corporate social responsibility. Ways of improving business practices taking into consideration stakeholder needs, global guidelines and corporate values and ethics.

Chapter 5 is the concluding chapter and summarises the discussion of corporate social responsibility and the possibility of a new International law for corporate social responsibility.


The principal reading will concentrate on journals, articles, papers on the analysis of CSR. Individual papers, seminars, conference papers and online sources would also be used. Furthermore, a review of a number of case studies from around the world illustrating corporate social responsibility.


The extent of CSR is dependent on a strong and effective public sphere. The increased attention in UK about ethics in British society and CSR issues heightened awareness of risk and risk management; and a growth in the media exposure concerning CSR.

This paper would make use of objective data in assessing the potential and limits of good corporate behaviour by multinational companies thereby demonstrating the success of CSR. It would examine the impact and effectiveness of existing guidelines, voluntary codes and standards adopted by multinational corporations. Also, the use of a case studies as a background development to analyse current and environmental interactions between individuals, groups and the community as a whole.


June 2009 to July 2010 Literature search and reading

July 2010 First chapter and second chapter

August 2010 Further research and third chapter

September 2010 Editing, rewriting and Fourth chapter

October 2010 Fourth and fifth chapter

October/ November 2010 Editing

November 2010 Submission of complete thesis