An Empirical Study Between Board Characteristics And Corporate Social Responsibility

There is an increasing focus by firms on examining their corporate socialresponsibility, as well as Governments and non-governmental organizations. Also, theproblem of listed firms to fulfill the responsibility has caused great interest amongcommunity of academic and practice. Organizations that consider a strategy ofcorporate social responsibility (CSR) have to address the question to whom are weresponsible? To stakeholders is the common answer to this question. CSR is definedas the obligations or duties of an organization to a specific system of stakeholders.Though the board is the heart of corporate governance, is board activity as effective asit could be at achieving corporate compliance with CSR standards? This paper standson the basis of previous studies, supplemented by empirical research, and tests howthe board governance influences listed firms to fulfill corporate social responsibilities.This paper mainly consists three parts: the literature review, the measurement ofcorporate social responsibility, empirical studies. The first part of this article discussesthe definition and scope of CSR, the CSR stake-holder model, and we believe thatCSR, a dimension of corporate governance, can be a positive contribution to themarket value of the firm in the long run. In the second part, on the basis ofstake-holder theory, the article identifies six groups as key stakeholders includingemployees, customers, investors, suppliers, loaners, governments, constructs a set offinancial index representing CSR related to these key stakeholders and figures out themeasurement of CSR with the help of principle component analysis. The third sectionfocuses on the empirical research between the boards and corporate socialresponsibility. The sample for this study consisted of2028listed companies selectedfrom A share market in2009-2010two years. The dependent variables were theratings for CSR. The independent variables include duality of the chairman andgeneral manager, the percentag of the independent directors, the board size, Directors’remuneration, the frequency of board meetings and the proportion of shares ofpredominent controlling shareholders.Results support the hypothesis that SR firms have more effective directors andhigher percentage of independent directors than their non-SR counterparts. There aremore meetings in SR firms than non-SR firms, but the result is not significant. At the same time, no significant differences are between SR firms and non-SR firmsobserved with respect to duality of the chairman and general manager, directors’remuneration and the proportion of shares of predominant controlling shareholders.We believe that effective board of directors is very beneficial for listed firms to fulfillcorporate social responsibility.In the end, the corresponding measures to improve were set forth, and somesuggestions were given to board governance. Determine a right size of the listed firmsdepending on the amount of work to be done, and group dynamics and enhance theeffectiveness of independent directors; it is necessary to build a system that theindependent director receive remuneration from an independent third organization andmix different remuneration forms; the establishment of corporate social responsibilityaccounting can be a positive contribution to listed firms’ transparency of information;in the arrangement of board staff, the establishment of workers participation systemcan help the firm avoid that one share dominates exclusively; otherwise, we can makefull advantages of board meetings and improve the relevant laws and regulations toprotect the interests of minority shareholders.