Corporate Social Responsibility in a Corporate Governance Framework

Yohanes Eko Riyanto () and Linda A. Toolsema ()
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Linda A. Toolsema: Department of Economics, University of Groningen,

Departmental Working Papers from National University of Singapore, Department of Economics

Abstract: We argue that Corporate Social Responsibility (CSR) may affect the agency relationship inside a firm. We analyze how CSR and the threat of stakeholder activism influence effort of manager and shareholder, and describe how CSR may arise endogenously in this context. By engaging in CSR the shareholder can commit to less monitoring, increase the manager’s effort, and raise profits. Even a socially indifferent shareholder may thus benefit from CSR and prefer to behave socially responsibly. He may even find it optimal to sponsor a social activist, giving it the means to exert pressure.

Keywords: Corporate Social Responsibility; Corporate governance; Stakeholder activism. (search for similar items in EconPapers)
JEL-codes: G30 M14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu, nep-hrm, nep-lab, nep-sea and nep-ure
Date: 2007-05
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Persistent link: http://EconPapers.repec.org/RePEc:nus:nusewp:wp0702

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