Corporate Social Responsibility Issue
Corporate Governance and Performance in Socially Responsible Corporations: New Empirical Insights from a Neo-Institutional Framework
Version of Record online: 5 MAY 2013
© 2013 John Wiley & Sons Ltd
Corporate Governance: An International Review
Special Issue: Corporate Social Responsibility, Institutional Structures and Corporate Governance
Volume 21, Issue 5, pages 468–494, September 2013
How to Cite
Ntim, C. G. and Soobaroyen, T. (2013), Corporate Governance and Performance in Socially Responsible Corporations: New Empirical Insights from a Neo-Institutional Framework. Corporate Governance: An International Review, 21: 468–494. doi: 10.1111/corg.12026
- Issue online: 4 AUG 2013
- Version of Record online: 5 MAY 2013
- School of Management and Business
- Aberystwyth University research funds
- Corporate Governance;
- Corporate Financial Performance;
- Corporate Social Responsibility;
- Neo-Institutional Theory
This paper investigates the relationship between corporate governance (CG) and corporate social responsibility (CSR) and, consequently, examines whether CG can positively moderate the association between corporate financial performance (CFP) and CSR.
Using a sample of large listed corporations from 2002 to 2009, we find that, on average, better-governed corporations tend to pursue a more socially responsible agenda through increased CSR practices. We also find that a combination of CSR and CG practices has a stronger positive effect on CFP than CSR alone, implying that CG positively influences the CFP-CSR relationship. Our results are robust to controlling for different types of endogeneities, as well as alternative CFP, CG and CSR proxies.
The paper generally contributes to the literature on CG, CSR, and CFP. Specifically, we make two main new contributions to the extant literature by drawing on new insights from an overarching neo-institutional framework. First, we show why and how better-governed corporations are more likely to pursue a more socially responsible agenda. Second, we provide evidence on why and how CG might strengthen the link between CFP and CSR.
Our findings have important implications for corporate regulators and policy-makers. Since our evidence suggests that better-governed corporations are more likely to be more socially responsible with a consequential positive effect on CFP, it provides corporate regulators, managers and policy-makers with a new impetus to develop a more explicit agenda of jointly pursuing CG and CSR reforms, instead of merely considering CSR as a peripheral component of CG or as an independent corporate activity.