Briefing for Poster Reforming Corporate Governance to enhance

Corporate Social Responsibility in modern-day organizations

Marina B Itwaru 2019620
University of Bedfordshire

It is a widely held view that corporate governance reflects the good a company does. Recent
studies and reports however, explained that there is something called bad corporate governance
and then there is good corporate governance (Kiger, 2020; Fernando, Li, and Hou, (2020).
Historically the term Corporate governance has been used to describe the policies and procedures
set in place to ensure a business operates within the law (Stuebs and Sun, 2015). Despite its
common usage, it is used in different disciplines to mean different things as well and it perhaps
why it is considered a nebulous term. There is no agreed definition on what constitutes corporate
governance but there are many analysis of theory constructs to identify connotative meanings of
the term. Marie L’Huillier, (2014) listed various theories that helped construct a generalized
meaning of Corporate Governance with special focus on the agency theory and stakeholder
theory. In this research, Marie L’Huillier (2014), stated that the agency theory explains that
corporate governance is more about creating and monitoring the mechanisms to increase
shareholder capital by dipping on agency loss. Whereas in the Stakeholder theory, corporate
governance is that balance that ensure all stakeholders, are considered to have the right to be
heard.

Since the definition of Corporate governance varies among researchers and theorists, it is
important to clarify how the term has changed over the years. The current framework is flawed
because good corporate governance requires you to be transparent when disclosing information
about the operations and finances of a company none of which is happening is huge corporations
worldwide (Kurniati, 2019). Therefore, the existing framework that organizations adopt needs
total reform as directors and executives are obsess with the short term financial market rather
than their social responsibilities (Shrivastava and Addas (2014).

Kurniati, (2019) argued that good corporate governance has a significant influence on company
value as it pertains to the triple bottom line. Similarly, another study by Hussain, Rigoni and Orij
(2016), who compared corporate governance to the triple bottom line and found that they are
essentially inversely related. Despite this, little progress has been made by organisations
worldwide to achieve this, as pressure has mounted to meet the demands of the financial markets
(Hitt and Haynes, 2018). Cho et al., (2015) explains that the consequences of short term financial
markets stimulates an appetite for more and therefore pushes stock buybacks causing
unnecessary disbursements and a failure to invest sustainably. The result of this is a disaster
waiting to happen, because many companies and their shareholders have failed to acknowledged
the environmental, social or even their own, long-term, economic sustainability (Cho et al.,
2015).
A reasonable approach to tackle this issue could be to have reform frameworks for corporate
governance. It is important to re-visit corporate governance in the light of the convergence of
theories and approaches and with a fresh angle, which has a holistic view. Therefore, strategies
to enhance or develop a new reform would be to focus on things like sustainable finances,
accountability, fairness and transparency. Raworth, K. (2017) explained that sustainable
organisations requires an economic market in which there are serious and willing investors who
can device long-term sustainability plans, even at the expense of short-term incomes. Chabrak,
(2018) also suggest that changes should be made to company law where it is compulsory for
boards of directors to be transparent in developing sustainability strategies. Directors should also
be obligated to identifies and addresses environmental and social issues (Peel and Schechinger,
(n.d.). There is also an urgent call for non-financial reporting to address a company’s social and
environmental risks and impacts (Werne, 2019).

In summary, it has been shown from this review above that in today’s corporate environment,
business developments should emphasize more on other critical factors such as company laws,
principles and institutional frameworks. Corporate governance is constantly evolving and
changes are determined by both internal and external environmental aspects. Moreover, an
effective and good corporate governance cannot be explained and achieve by one framework
alone but rather to have a combination of various aspects from different theories and other
business models that is specific to the type of organization. It is best to work in combination of
these factors to address not only the social relationships but also highlight the principles and
regulation in order to go further than the norms of a mechanical approach towards corporate
governance. Hence it is crucial that a holistic realization be driven across the corporate world
that would bring about a different perspective towards corporate governance. As indicated
previously the Current corporate governance practice is contributing to a wide range of threats,
social, environmental and economic impacts that is devastating to the entire world. We all need
to have that sense of urgency to address the appalling risk of climate change as well as abuse of
power and resources.
POSTER
References

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