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The Complementarity between Corporate Governance and Corporate Social Responsibility

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  • Andrea Beltratti

    (Bocconi University, Instituto di Economia Politica, Via Gobbi 5, 20136 Milan, Italy.)

Abstract

The paper aims at understanding the relation between corporate governance (CG) and corporate social responsibility (CSR). In theory, CG refers mainly to the mechanisms which protect outsiders and ensure an effective working of the firm, while CSR refers mainly to the objective function of the firm and the attention for various stakeholders. The paper discusses these concepts, with particular attention to the relation between CSR and profit maximization. This relation is important to evaluate which actions are truly socially responsible and which actions are simply profit maximization in disguise. The available empirical evidence shows that both CG and CSR are positively related to the market value of the firm. This suggests that in the long run the market mechanism should be able to provide additional resources to those companies which are best at maximizing a widely defined bottom line. The Geneva Papers (2005) 30, 373–386. doi:10.1057/palgrave.gpp.2510035

Suggested Citation

  • Andrea Beltratti, 2005. "The Complementarity between Corporate Governance and Corporate Social Responsibility," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 30(3), pages 373-386, July.
    • Handle: RePEc:pal:gpprii:v:30:y:2005:i:3:p:373-386
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