Corporate Governance and Social Responsibility (CSR): Principles and Practices Questions

Question 1

Define corporate governance.

Accepted Answer

Corporate governance is the system of rules, practices and processes by which a company is directed and controlled to ensure transparency and accountability.

Question 2

State any one principle of corporate governance.

Accepted Answer

Transparency is a principle of corporate governance which requires timely and accurate disclosure of information.

Question 3

What is CSR?

Accepted Answer

CSR means the responsibility of business towards society and stakeholders to contribute to social welfare and sustainable development while achieving business objectives.

Question 4

State any one CSR activity.

Accepted Answer

Skill development and education programmes are CSR activities that support social development.

Question 5

What is transparency?

Accepted Answer

Transparency means providing timely, accurate and adequate disclosure of relevant information to stakeholders.

Question 6

What is meant by accountability?

Accepted Answer

Accountability means board and management are answerable for their decisions, actions and performance to shareholders and stakeholders.

Question 7

Explain the need/importance of corporate governance.

Accepted Answer

Corporate governance is needed to protect the interests of shareholders and stakeholders by ensuring fairness and proper control. It improves transparency in reporting and disclosures and reduces chances of fraud, corruption and mismanagement through oversight and audit systems. Good governance increases investor confidence, improves access to capital and supports long-term sustainability and reputation of the company.

Question 8

Explain principles of good corporate governance.

Accepted Answer

Principles of good corporate governance include **transparency** (accurate disclosures), **accountability** (answerability of board/management), **fairness** (equitable treatment of shareholders and stakeholders), **responsibility** (compliance with laws and ethical standards) and **independence** (objective judgement and effective oversight, including independent directors and audit mechanisms).

Question 9

Explain key mechanisms of corporate governance.

Accepted Answer

Important governance mechanisms include an effective **board of directors** with independent directors, strong **internal controls** and **audit** (internal and external) to ensure reliable reporting, timely **disclosures and reporting** to stakeholders, protection of **shareholder rights** through meetings and voting, and **whistle-blower mechanisms** to report unethical practices. These tools improve monitoring and accountability.

Question 10

Explain CSR and its benefits to business and society.

Accepted Answer

CSR means responsible business conduct towards society and environment. CSR benefits business by improving reputation, goodwill and customer loyalty and by enhancing employee morale and retention. It benefits society through education, health, community development and environmental protection. CSR also reduces business risk through better compliance and sustainable practices, supporting long-term survival.

Question 11

Explain CSR models/approaches.

Accepted Answer

CSR approaches include **Carroll’s pyramid** (economic, legal, ethical, philanthropic responsibilities), **stakeholder approach** (balance interests of various stakeholders), **triple bottom line** (People, Planet, Profit) and **strategic CSR** where CSR is integrated with business strategy to create shared value rather than only charity.

Question 12

Differentiate between corporate governance and CSR.

Accepted Answer

Corporate governance focuses on how a company is directed and controlled through transparency, accountability and protection of investor interests. CSR focuses on the responsibility of business towards society and stakeholders through ethical behaviour and sustainable development. Governance is mainly about internal control and compliance; CSR is about social and environmental contribution. Both together support trust and long-term sustainability.

Question 13

Explain corporate governance. Discuss its principles and mechanisms of corporate governance.

Accepted Answer

Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. It defines the relationship among shareholders, board of directors, management and other stakeholders and ensures that the company is run in a transparent, fair and accountable manner.

**Principles of corporate governance:** (1) **Transparency**—timely and accurate disclosure of financial and non-financial information. (2) **Accountability**—board and management are answerable for decisions and performance. (3) **Fairness**—equitable treatment of shareholders including minority shareholders and consideration of stakeholder interests. (4) **Responsibility**—compliance with laws, ethical standards and proper use of resources. (5) **Independence**—objective judgement and effective oversight, supported by independent directors.

**Mechanisms of corporate governance:** Corporate governance is implemented through an effective **board of directors** and board committees such as audit committee, nomination and remuneration committee and stakeholder relationship committee. Strong **internal control systems** and **internal audit** prevent fraud and ensure reliability. **External audit** provides independent verification of accounts. Proper **disclosure and reporting** in annual reports and statutory filings increases transparency. Protection of **shareholder rights** through meetings and voting, and **whistle-blower mechanisms** to report wrongdoing strengthen accountability.

Thus, good corporate governance builds trust, reduces risk and supports sustainable growth.

Question 14

Explain CSR. Discuss CSR approaches and challenges in implementing CSR.

Accepted Answer

Corporate Social Responsibility (CSR) refers to the responsibility of business towards society and stakeholders to contribute to social welfare and sustainable development while achieving business objectives. CSR expects a business to consider the impact of its decisions on employees, customers, community and environment.

**CSR approaches/models:** Carroll’s CSR pyramid explains economic, legal, ethical and philanthropic responsibilities. Stakeholder approach suggests balancing interests of all stakeholders. Triple Bottom Line approach evaluates performance on People, Planet and Profit. Strategic CSR integrates CSR with core business strategy to create shared value and long-term competitiveness.

**Challenges/limitations:** Implementing CSR faces challenges such as selecting the right priority areas among many social needs and measuring the real impact of CSR activities. CSR may become publicity-oriented or greenwashing if not genuine. Limited resources, especially in smaller firms, can restrict CSR spending. Weak transparency and poor execution reduce effectiveness. Lack of stakeholder coordination and long-term commitment also affects outcomes.

Therefore, CSR is most effective when planned strategically, implemented sincerely and monitored with transparency.

Question 15

Explain the importance of corporate governance and CSR for sustainable business. How do they complement each other?

Accepted Answer

Corporate governance and CSR are essential for sustainable business because they build trust, ensure responsible decision-making and support long-term performance.

**Importance of corporate governance:** Good governance protects investors and stakeholders by ensuring transparency, accountability and fairness. It reduces fraud and mismanagement through board oversight, audits and internal controls. It improves credibility and investor confidence, making it easier to raise funds and sustain growth.

**Importance of CSR:** CSR improves business reputation and goodwill and strengthens relationships with community, customers and government. It improves employee morale and retention and helps businesses manage social and environmental risks through responsible practices. CSR supports sustainable development and long-term survival.

**How they complement each other:** Corporate governance provides the framework of control, disclosure and accountability that ensures CSR is genuine and not just publicity. CSR reflects ethical and responsible behaviour beyond compliance and strengthens stakeholder trust, which in turn supports governance goals. Together, governance and CSR help an organisation achieve sustainable growth, reduce risk and maintain long-term legitimacy in society.

Corporate Governance and Social Responsibility (CSR): Principles and Practices

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