Relationship between Corporate Social Responsibility and Corporate Governance: Literature Review

[[abstract]]The study, through aggregating literature, aims to explore the relationship between corporate social responsibility (CSR) and corporate governance and to understand the impact of relevant variables of corporate governance on the performing of CSR. The impact of corporate governance on CSR is explored through five governance mechanisms, which are board characteristics, ownership structure, management style, shareholding pledge ratio, and information disclosure as well as transparency. In terms of the board characteristics, when the company's independent director ratio is high, it will be more likely engaging in social responsibility behavior and have better financial performance. For the ownership structure, when the directors’ and the institutional investors’ shareholding ratios are higher, the more professional supervision will be provided; therefore, the better the performance of the corporate social responsibility. In the aspect of the management patterns, it is more effective to supervise the enterprise if the chairman does not serve as CEO at the same time. For the shareholding pledge ratio, the higher the director shareholding pledge ratio indicates the lack of funds for directors and thus reduces the monitoring of the company and disregards CSR performance. In terms of the information disclosure and transparency, improving the degree of information disclosure will help to reduce internal and external information asymmetry and agency problems, and thus, the company is more willing to think of the benefits of stakeholders and thereby gaining better CSR performance. According to the study of the influence of CSR information disclosure, the finding is that the CSR information disclosure not only provides a positive impact on the company's financial performance but also reduces the cost of capital, and even affects the company's share price and promotes the liquidity of the stock market