CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITY

CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITY

Directly affect an organization's performance.

I.Definition:

Corporate Governance
•Is concerned with balancing economic and social goals and between individual and communal goal. The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations, and society.

Corporate Social Responsibility

Is concerned with treating the firm's stakeholders ethically or in socially responsible manner. Stakeholders exist both within a firm and outside. Consequently, behaving socially responsible will increase the human development of stakeholders both within and outside the corporation.

A. Responsibility and Contradiction between Corporate Governance and CSR

III. CSR Disclosure-The growing CSR awareness is also reflected in the increasing number of CSR and sustainability reports and the provision of CSR- related information such as through advertising (kolk 2005).

CORPORATE GOVERNANCE

Relate to profit maximization.

Protection for the provided capital to the firm.

The broadcast control mechanism within which a company.

BETWEEN

Fused into companies Corporate Governance practices.

Focus in ethical business practices.

Directly affect an organization's performance.

CORPORATE SOCIAL RESPONSIBILITY

Contrast profit maximization.

Suggest a set of actions beneficial for external stakeholder.

Based on self- governance(external legal and regulatory mechanisms )

II. Stakeholder vs. Shareholder -When it comes to investing in corporation, there are shareholders and stakeholders. While they have similar- sounding names, their investment in a company is quite different.

STAKEHOLDERS

SHAREHOLDERS

Owners and shareholders.

Employees of the company.

Bondholders who own company- issued debt customers who may rely on the company to provide a particular good or service.

Can be individual, company, or institution that owns at least one share of the company.

Have the right exercise vote and to affect the management of a company.

Owners of the company, but they are not liable for the company debts.

A. Special Considerations

The emergence of corporate social responsibility (CSR), a self- regulating business that helps a company be socially accountable to itself, its stakeholders, and the public, has encouraged companies to consider all stakeholders' interests. During their decision- making processes, for example, companies might consider their impact on the environment instead of making choices based solely on shareholders' interests. The general public is an external stakeholders now considered under CSR governance.

Reasons for CSR Disclosure:

By disclosing information on their social and environmental performance, firms want to minimize the (potential) costs arising from the firms' interaction and its natural and societal environment - referred to as political or societal costs ( Fields et al. 2001)

Voluntary corporate social disclosure gives the public information regarding a company's activities that relate to the community.

IV. Annual General Meeting (AGM)- Is 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.

Minutes of the previous meeting:The last year's AGM minutes must be presented and approved.

Financial Statements: The company presents its annual financial statement to its shareholders for approval .

Ratification of the director's actions: The shareholders approve and ratify ( or not ) the board of director's decisions over the previous year.This often includes the payment of a dividend.

Election of the board of directors: The shareholders elect the board of directors for the upcoming year.