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CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITY - Coggle Diagram
CORPORATE GOVERNANCE
AND SOCIAL RESPONSIBILITY
CORPORATE GOVERNANCE
Concerned with balancing economic and social goals and between individual and communal goals.
protection for the provided capital to the firm
the broadest control mechanism within which a company
related to profit maximization
CORPORATE SOCIAL RESPONSIBILITY
concerned with treating the firm's stakeholders ethically or in a socially responsible manner
suggest a set of actions beneficial for external stakeholder
based on self governance (external legal and regulatory mechanisms
contrast profit maximization
Fused into
companies Corporate
Governance practices
Directly affect an
organization’s performance
Results in better
image of an organization
Focus in ethical
business practices
Stakeholder vs. Shareholder
When it comes to investing in a corporation, there are shareholders and stakeholders. While they have similar sounding names, their investment in a company is quite different.
STAKEHOLDERS
employees of the company
bondholders who own company-issued debt
owners and shareholders
suppliers and vendors who may depend on the company to provide a consistent revenue stream
customers who may rely on the company to
provide a particular good or service
bound to the company for the long term and
reasons of greater need
Although shareholders may be the largest type
of stakeholders, because shareholders are affected directly by a company's performance, it has become more common place for other groups to be considered stakeholders.
SHAREHOLDERS
Owners of the company, but they are not liable
for the company debts
For private companies, sole proprietorships,
and partnerships, the owners are responsible for their obligations
Have the right to exercise vote and to affect the
management of a company
A shareholder might be an individual investor
Can be individual, company, or institution that
owns at least one share of the company
Can sell their stock and buy different stock; they
do not have a long-term need for the company
CSR DISCLOSURE
defined as the information that a company discloses about its environmental impact and its relationship with its
stakeholders through relevant communication channels (Gray et al. 2001).
Reasons for CSR Disclosure:
Voluntary corporate social disclosure gives the public information regarding a company's activities that
relate to the community.
The company would have a better reputation, which would increase its chances to secure contracts
from the Government as it is seen as socially responsible.
By disclosing information on their social and environmental performance, firms want to minimize the (potential) costs arising from the firm's interaction and its natural and societal environment—referred to as political or societal costs (Fields et al. 2001).
Corporate social responsibility may be able to strengthen stakeholder relations as reporting promotes
corporate transparency and instills greater confidence and trust
Annual General Meeting (AGM)
a mandatory yearly gathering of a company's interested shareholders. At an AGM, the company's directors present a yearly report containing shareholders' information about its performance and strategy.
In most jurisdictions, the following items, by law, must be discussed at an AGM:
Financial statements
Ratification of the director's actions
Minutes of the previous meeting
Election of the board of directors