CSR, Directors and Top Management Officers: Responsibility and Accountability Pathways

Onyeka K. Osuji; Franklin N. Ngwu; Gary Lynch-Wood

doi:10.1017/9781108558006.005

5 - CSR, Directors and Top Management Officers: Responsibility and Accountability Pathways

from Part II - Infusing Corporate Social Responsibility in Corporate Governance

Published online by Cambridge University Press: 15 June 2023

Franklin N. Ngwu and

Onyeka K. Osuji: Affiliation:
University of Essex
Franklin N. Ngwu: Affiliation:
Pan-Atlantic University Lagos Business School, Nigeria
Gary Lynch-Wood: Affiliation:
University of Manchester School of Law

Book contents

Get access

Summary

This chapter investigates how the effectiveness of corporate social responsibility (CSR) can be enhanced through provisions for the responsibility and accountability of individuals, such as directors, who hold key positions or have significant influence on the corporate decision-making process. It draws on the organic theory of the corporation, tone-at-the-top organisational theory, and resource dependency, agency and stewardship theories to demonstrate an anthropocentric approach to corporate governance. This approach identifies critical corporate insiders for CSR-related responsibilisation and accountability.

Keywords

accountability agency theory corporate governance corporate social responsibility directors organic theory resource dependency theory stewardship theory tone-at-the-top

Information

Type: Chapter
Information: Corporate Social Responsibility Across the Globe
Innovative Resolution of Regulatory and Governance Challenges
, pp. 99 - 131

DOI: https://doi.org/10.1017/9781108558006.005 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2023

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Book purchase

Temporarily unavailable

References

Ahern, D. (2011). Directors’ duties: broadening the focus beyond content to examine the accountability spectrum. Dublin Law Journal, 33, 116–52.Google Scholar

Arden, DBE, M. (The Right Honourable Lady Justice) (2010). Regulating the conduct of directors. Journal of Corporate Law Studies, 10(1), 1–15.Google Scholar

Attenborough, D. (2020). Misreading the directors’ fiduciary duty of good faith. Journal of Corporate Law Studies, 20(1), 73–98.CrossRef Google Scholar

Bainbridge, S. M. and Henderson, M. T. (2016). Limited Liability: A Legal and Economic Analysis. Cheltenham, UK: Edward Elgar.CrossRef Google Scholar

Bendickson, J., Muldoon, J., Liguori, E. W. and Davis, P. E. (2016). Agency theory: background and epistemology. Journal of Management History, 22(4), 437–49.Google Scholar

Berle, A. A. (1965). The impact of the corporation on classical economic theory. Quarterly Journal of Economics, 79, 25–40.CrossRef Google Scholar

Berle, A. A. and Means, G. C. (1932). The Modern Corporation and Private Property. New Brunswick, NJ: Transaction.Google Scholar

Berliner, D. and Prakash, A. (2012). From norms to programs: the United Nations Global Compact and global governance. Regulation and Governance, 6, 149–66.Google Scholar

Bierce, A. (2003 [1911]). The Devil’s Dictionary. New York: Dover.Google Scholar

Bostrom, R. E. (2003). Corporate governance: developments and practices one year after Sarbanes-Oxley. International Financial Law Review, 22(10), 189–204.Google Scholar

Bowman, S. R. (1996). The Modern Corporation and American Political Thought. Law, Power, and Ideology. University Park: Pennsylvania State University Press.Google Scholar

Canning, M., O’Dwyer, B. and Georgakopoulos, G. (2019). Processes of auditability in sustainability assurance: the case of materiality construction. Accounting and Business Research, 49(1), 1–27.CrossRef Google Scholar

Capuano, A. (2010). Catching the leprechaun: company liability and the case for a benefit test in organic attribution. Australian Journal of Corporate Law, 24(2), 177–206.Google Scholar

Cartwright, P. (1996). Defendants in consumer protection statutes: a search for consistency. Modern Law Review, 59(2), 225–40.Google Scholar

Cartwright, P. (2001). Consumer Protection and Criminal Law. Cambridge: Cambridge University Press.Google Scholar

Cermak, R. (2018). Directors’ duties to respect human rights in offshore operations and supply chains: an emerging paradigm. Company and Securities Law Journal, 36(2), 124–49.Google Scholar

ChandlerJr, A. D. (1977). The Visible Hand: The Managerial Revolution in American Business. Cambridge, MA: Harvard University Press.Google Scholar

Cheffins, B. R. (1997). Company Law: Theory, Structure and Operation. Oxford: Clarendon Press.Google Scholar

Cheffins, B. R. and Armour, J. (2011). The past, present and future of shareholder activism by hedge funds. Journal of Corporation Law, 37(1), 51–103.Google Scholar

Cherry, M. A. and Sneirson, J. F. (2011). Beyond profit: rethinking corporate social responsibility and greenwashing after the BP oil disaster. Tulane Law Review, 85(4), 983–1038.Google Scholar

Choudhry, B. and Petrin, M. (2018). Corporate governance that ‘works for everyone’: promoting public policies through corporate governance mechanisms. Journal of Corporate Law Studies, 18(2), 381–415.Google Scholar

Chrisman, J. J., Chua, J. H., Kellermanns, F. W. and Chang, E. P. C. (2007). Are family managers agents or stewards? An exploratory study in privately held family firms. Journal of Business Research, 60(10), 1030–8.Google Scholar

Clough, J. and Mulhern, C. (2002). The Prosecution of Corporations. Melbourne: Oxford University Press.Google Scholar

Clutterbuck, D. and Waine, P. (1993). The Independent Board Director. London: McGraw-Hill.Google Scholar

Cochrane, A. (2012). Animals Rights without Liberation: Applied Ethics and Human Obligations. New York: Columbia University Press.Google Scholar

Coffee, J. C. (2005). A theory of corporate scandals: why the United States and Europe differ. Oxford Review of Economic Policy, 21(2), 198–211.Google Scholar

Committee on the Financial Aspects of Corporate Governance (Cadbury Committee). (1992). Report of the Committee on the Financial Aspects of Corporate Governance, London: Committee on the Financial Aspects of Corporate Governance and Gee and Co. Ltd.Google Scholar

Cooper, D. J., Dacin, T. and Palmer, D. (2013). Fraud in accounting, organizations and society: extending the boundaries of research. Accounting, Organizations and Society, 38, 440–57.Google Scholar

Crespí-Cladera, R. and Pascual-Fuster, B. (2014). Does the independence of independent directors matter? Journal of Corporate Finance, 28, 116–34.Google Scholar

Davis, J. H., Schoorman, F. D. and Donaldson, R. (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1), 20–47.Google Scholar

Demb, A. and Neubauer, F. F. (1992). The Corporate Board: Confronting the Paradoxes. New York: Oxford University Press.Google Scholar

DeMott, D. A. (2004). The texture of loyalty. Studies in International Financial, Economic, and Technology Law, 7, 23–47.Google Scholar

de Villiers, C., Rinaldi, L. and Unerman, J. (2014). Integrated reporting: insights, gaps and agendas for future research. Accounting, Auditing & Accountability Journal, 27(7), 1042–67.Google Scholar

Donaldson, L. and Davis, J. H. (1991). Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of Management, 16(1), 49–64.CrossRef Google Scholar

Dunlavy, C. A. (2004). From citizens to plutocrats: nineteenth-century shareholder voting rights and theories of the corporation. In Lipartito, K. and Sicilia, D. B., eds., Constructing Corporate America: History, Politics, and Culture. Oxford: Oxford University Press, pp. 66–93.Google Scholar

Eisenhardt, K. M. (1989). Agency theory: an assessment and review. Academy of Management Review, 14(1), 57–74.Google Scholar

Elshandidy, T. and Hassanein, A. (2014). Do IFRS and board of directors’ independence affect accounting conservatism? Applied Financial Economics, 24(16), 1091–102.Google Scholar

Erasmus, L. and Coetzee, P. (2018). The drivers of stakeholders’ view of internal audit effectiveness: management versus audit committee. Managerial Auditing Journal, 33(1), 90–114.Google Scholar

European Commission (2003). Modernising Company Law and Enhancing Corporate Governance in the European Union – A Plan to Move Forward. COM (2003) 284 final. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52003DC0284&from=EN.Google Scholar

European Commission (25 February 2005). Commission Recommendation of 15 February 2005 on the Role of Non-executive or Supervisory Directors of Listed Companies and on the Committees of the (Supervisory) Board, 2005/162/EC. Official Journal of the European Union, L/52/51. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2005.052.01.0051.01.ENG&toc=OJ%3AL%3A2005%3A052%3AFULL.Google Scholar

Fama, E. F. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88, 288–307.Google Scholar

Fama, E. F. and Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 26, 301–25.Google Scholar

Financial Reporting Council (FRC). (July 2018). The UK Corporate Governance Code. London: FRC. www.frc.org.uk/getattachment/88bd8c45-50ea-4841-95b0-d2f4f48069a2/2018-UK-Corporate-Governance-Code-FINAL.PDF.Google Scholar

Fischer, D. and Friedman, H. H. (2019). Tone-at-the-top lessons from Abrahamic justice. Journal of Business Ethics, 156, 209–25.CrossRef Google Scholar

Foster, N. (2008). Personal civil liability of company officers for workplace torts. Torts Law Journal, 16, 20–68.Google Scholar

Gale, M., Gale, S. and Scanlan, G. (1999). Fraud and the Plc. London: Butterworths.Google Scholar

Gray, R. (2010). Is accounting for sustainability actually accounting for sustainability … and how would we know? An exploration of narratives of organisations and the planet. Accounting, Organizations and Society, 35(1), 47–62.Google Scholar

Gutiérrez, M. and Sáez, M. (2013). Deconstructing independent directors. Journal of Corporate Law Studies, 13(1), 63–94.CrossRef Google Scholar

Hernandez, M. (2008). Promoting stewardship behaviour in organizations: a leadership model. Journal of Business Ethics, 80, 121–8.CrossRef Google Scholar

Hetherington, J. A. C. (1966). Trends in enterprise liability: law and the unauthorized agent. Stanford Law Review, 19(1), 76–128.Google Scholar

Higgs, D. (2003). Review of the Role and Effectiveness of Non-executive Directors. London: Department of Trade and Industry.Google Scholar

Hillman, A. J., Withers, M. C. and Collins, B. J. (2009). Resource dependence theory: a review. Journal of Management, 35(6), 1404–27.Google Scholar

Hood, P. (2013). Directors’ duties under the Companies Act 2006: clarity or confusion. Journal of Corporate Law Studies, 13(1), 1–48.Google Scholar

Howells, G. and Weatherill, S. (2005). Consumer Protection Law, 2nd ed. Aldershot, UK: Ashgate.Google Scholar

Idowu, S. (2009). Corporate social responsibility from the perspective of corporate secretaries. In Idowu, S. and Filho, W. L., eds., Professionals’ Perspectives of Corporate Social Responsibility, Berlin Heidelberg: Springer-Verlag, pp. 49–70.CrossRef Google Scholar

Inkpen, A. C. and Tsang, E. W. K. (2007). Learning and strategic alliances. Academy of Management Annuals, 1, 479–511.Google Scholar

Ireland, P. (2010). Limited liability, shareholder rights and the problem of corporate irresponsibility. Cambridge Journal of Economics, 34(5), 837–56.Google Scholar

Ireland, P. (2018). From Lonrho to BHS: the changing character of corporate governance in contemporary capitalism. King’s Law Journal, 29(1), 3–35.Google Scholar

Jensen, M. C. and Meckling, W. H. (1976). Theory of the firm: managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–60.Google Scholar

Johnson, L. (2003). After Enron: remembering loyalty discourse in corporate law. Delaware Journal of Corporate Law, 28, 27–73.Google Scholar

Keay, A. (2007). Company Directors’ Responsibilities to Creditors. Abingdon, UK: Routledge.CrossRef Google Scholar

Keay, A. (2014a). An assessment of private enforcement actions for directors’ breaches of duty. Civil Justice Quarterly, 33(1), 76–92.Google Scholar

Keay, A. (2014b). The public enforcement of directors’ duties: a normative inquiry. Common Law World Review, 43(2), 89–119.Google Scholar

Keay, A. (2015). The shifting of directors’ duties in the vicinity of insolvency. International Insolvency Review, 24(2), 140–64.Google Scholar

Keay, A. (2016). Assessing and rethinking the statutory scheme for derivative actions under the Companies Act 2006. Journal of Corporate Law Studies, 8(1), 39–68.CrossRef Google Scholar

Keay, A. (2019). Having regard for stakeholders in practising enlightened shareholder value. Oxford University Commonwealth Law Journal, 19(1), 118–38.Google Scholar

Keay, A. and Loughrey, J. (2015). The framework for board accountability in corporate governance. Legal Studies, 35(2), 252–79.Google Scholar

Keay, A., Loughrey, J., McNulty, T., Okanigbuan, F. and Stewart, A. (2020). Business judgment and director accountability: a study of case-law over time. Journal of Corporate Law Studies, 20(2), 359–87.CrossRef Google Scholar

Kiliç, M. and Kuzey, C. (2018). Determinants of forward-looking disclosures in integrated reporting. Managerial Auditing Journal, 33(1), 115–44.Google Scholar

Klink, F. J. (2004). Director risk after Sarbanes-Oxley. In Campbell, D. and Woodley, S., eds., Trends and Developments in Corporate Governance. The Hague: Kluwer Law, pp. 197–212.Google Scholar

Koutsias, M. (2017). The fallacy of property rights’ rhetoric in the company law context: from shareholder exclusivity to the erosion of shareholders’ rights. International Company and Commercial Law Review, 28(6), 217–33.Google Scholar

KPMG (2015). Currents of Change: The KPMG Survey of Corporate Responsibility Reporting 2015. Amsterdam: KPMG International.Google Scholar

KPMG (2017). KPMG Survey of Corporate Responsibility Reporting 2017. Amsterdam: KPMG International.Google Scholar

Lail, B., MacGregor, J., Stuebs, M. and Thomasson, T. (2015). The influence of regulatory approach on tone at the top. Journal of Business Ethics, 126, 25–37.CrossRef Google Scholar

Latella, D. (2009). Shareholder derivative suits: a comparative analysis and the implications of the European Shareholders’ Rights Directive. European Company and Commercial Law Review, 6(2–3), 307–23.Google Scholar

Latella, D. (2010). The shareholder derivative suits: disfunction and remedies against a ‘paradoxal’ inactivity. Corporate Ownership & Control, 7(4–2), 297–302.Google Scholar

Laufer, W. S. (2002). Corporate prosecution, cooperation and the trading of favours. Iowa Law Review, 87(2), 643–67.Google Scholar

Lee, J. (2018). The corporate governance officer as a transformed role of the company secretary: an international comparison. South Carolina Journal of International Law and Business, 14(2), 106–41.Google Scholar

Lindblom, L. (2007). Dissolving the moral dilemma of whistleblowing. Journal of Business Ethics, 76, 413–26.Google Scholar

Lombard, S. and Joubert, T. (2014). The legislative response to the shareholders v stakeholders debate: a comparative overview. Journal of Corporate Law Studies, 14(1), 211–40.CrossRef Google Scholar

Loughrey, J., Keay, A. and Cerioni, L. (2008). Legal practitioners, enlightened shareholder value and the shaping of corporate governance. Journal of Corporate Law Studies, 8(1), 79–111.Google Scholar

Madison, K., Holt, D. T., Kellermanns, F. W. and Ranft, A. L. (2016). Viewing family firm behavior and governance through the lens of agency and stewardship theories. Family Business Review, 29(1), 65–93.Google Scholar

Maurović, L. and Hasić, T. (2013). Reducing agency costs by selecting an appropriate system of corporate governance. Economic Research-Ekonomska Istraživanja, 26(1), 225–42.Google Scholar

McCormack, G., Keay, A. and Brown, S. (2017). Directors’ liability and disqualification. In McCormack, G., Keay, A. and Brown, S., eds., European Insolvency Law: Reform and Harmonization. Cheltenham, UK: Edward Elgar, pp. 22–64.Google Scholar

McNulty, T. and Stewart, A. (2015). Developing the governance space: a study of the role and potential of the company secretary in and around the board of directors. Organisational Studies, 36(4), 513–35.Google Scholar

Menzies, D. (1959). Company directors. Australia Law Journal, 33, 156–79.Google Scholar

Mezzanotte, F. E. (2017). The unconvincing rise of the statutory derivative action in Hong Kong: evidence from its first 10 years of enforcement. Journal of Corporate Law Studies, 17(2), 469–96.Google Scholar

Miller, C. C., Washburn, N. T. and Glick, W. H. (2013). The myth of firm performance. Organization Science, 24(3), 948–64.CrossRef Google Scholar

Millon, D. (1990). Theories of the corporation. Duke Law Journal, 39(2), 201–62.Google Scholar

Milman, D. (2013). The Governance of Distressed Firms. Cheltenham, UK: Edward Elgar.Google Scholar

Moore, M. (2010). The evolving contours of the board’s risk management function in UK corporate governance. Journal of Corporate Law Studies, 10(2), 279–308.Google Scholar

Near, J. P. and Miceli, M. P. (1985). Organizational dissidence: the case of whistle-blowing. Journal of Business Ethics, 4(1), 1–16.Google Scholar

Nelken, D. and Levi, M. (2018). Sir Philip Green and the unacceptable face of capitalism. King’s Law Journal, 29(1), 36–57.Google Scholar

North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.CrossRef Google Scholar

Organisation for Economic Co-operation and Development (OECD). (2015). G20/OECD Principles of Corporate Governance. Paris: OECD Publishing. www.oecd.org/daf/ca/Corporate-Governance-Principles-ENG.pdf.Google Scholar

Osuji, O. K. and Moore, I. (2017). Director disqualification as a corporate governance tool in developing and emerging markets. In Ngwu, F. N., Osuji, O. K. and Stephen, F., eds., Corporate Governance in Developing and Emerging Markets. Abingdon, UK: Routledge, pp. 270–90.Google Scholar

Parguel, B., Benoît-Moreau, F. and Larceneux, F. (2011). How sustainability ratings might deter ‘greenwashing’: a closer look at ethical corporate communication. Journal of Business Ethics, 102, 15–28.Google Scholar

Parkinson, J. (2003). Disclosure and corporate social and environmental performance: competitiveness and enterprise in a broader social frame. Journal of Corporate Law Studies, 3(1), 3–39.Google Scholar

Parkinson, J. E. (1993). Corporate Power and Responsibility: Issues in the Theory of Company Law. Oxford: Clarendon Press.Google Scholar

Patelli, L. and Pedrini, M. (2015). Is tone at the top associated with financial reporting aggressiveness? Journal of Business Ethics, 126, 3–19.Google Scholar

Pfeffer, J. and Salancik, G. R. (1978). The External Control of Organizations: A Resource Dependence Perspective. New York: Harper & Row.Google Scholar

Rajak, H. (2004). Company law, limited liability, and the small world of directors’ negligence. Studies in International Financial, Economic, and Technology Law, 7, 117–41.Google Scholar

Ramsay, I. M. and Saunders, B. B. (2006). Litigation by shareholders and directors: an empirical study of the Australian derivative action. Journal of Corporate Law Studies, 6(2), 397–446.Google Scholar

Reisberg, A. (2008). Derivative Actions and Corporate Governance: Theory and Operation. Oxford: Oxford University Press.Google Scholar

Rider, B. A. K. (1978). Amiable lunatics and the rule in Foss v. Harbottle. Cambridge Law Journal, 37(2), 270–87.CrossRef Google Scholar

Rinaldi, L. (2019). Accounting for sustainability governance: the enabling role of social and environmental accountability research. Social and Environmental Accountability Journal, 39(1), 1–22.Google Scholar

Rost, S. R. (2004). Control and liability questions for close private companies. In Campbell, D. and Woodley, S., eds., Trends and Developments in Corporate Governance. The Hague: Kluwer Law, pp. 319–40.Google Scholar

Safari, N. and Gelter, M. (2019). British Home Stores collapse: the case for an employee derivative claim. Journal of Corporate Law Studies, 19(1), 43–68.Google Scholar

Sheridan, T. and Kendall, N. (1992). Corporate Governance: An Action for Profitability and Business Success. London: Pitman.Google Scholar

Siegel, S. (2006). Global accounting dimensions of corporate governance. In Norton, J. J. and Rickford, J., eds., Corporate Governance Post-Enron: Comparative and International Perspectives. London: BICL, pp. 49–66.Google Scholar

Sinkovics, N., Hoque, S. F. and Sinkovics, R. R. (2016). Rana Plaza collapse aftermath: are CSR compliance and auditing pressures effective? Accounting, Auditing & Accountability Journal, 29(4), 617–49.Google Scholar

Sjåfjell, B. (2018). Beyond climate risk: integrating sustainability into the duties of the corporate board. Deakin Law Review, 23, 41–62.Google Scholar

Stern, Y. Z. (1987). Corporate liability for unauthorized contracts – unification of the rules of corporate representation. University of Pennsylvania Journal of International Business Law, 9(4), 649–701.Google Scholar

Tanega, J. (2006). Sarbanes-Oxley financial crimes: on legal risk, potential liability and employee protection. In Bantekas, I. and Keramidas, G., eds., International and European Financial Criminal Law. London: LexisNexis Butterworths, pp. 154–79.Google Scholar

Tang, S. S. (2020). The anatomy of Singapore’s statutory derivative action: why do shareholders sue – or not? Journal of Corporate Law Studies, 20(2), 327–57.Google Scholar

Tombs, S. and Whyte, D. (2015). The Corporate Criminal: Why Corporations Must Be Abolished. London: Routledge.Google Scholar

Turner, S. J. (2020). Corporate law, directors’ duties and ESG interventions: analysing pathways towards positive corporate impacts relating to ESG issues. Journal of Business Law, 2020(4), 245–64.Google Scholar

United Kingdom House of Commons Work and Pensions and Business, Innovation and Skills Committees. (2017). BHS. First Report of the Work and Pensions Committee and Fourth Report of the Business, Innovation and Skills Committee of Session 2016–17 (HC 54). https://publications.parliament.uk/pa/cm201617/cmselect/cmworpen/54/54.pdf.Google Scholar

United States Sentencing Commission. (2000). Federal Sentencing Guidelines Manual and Appendices. www.ussc.gov/guidelines/archive/2000-federal-sentencing-guidelines-manual.Google Scholar

Watson, S. M. (2019). The corporate legal person. Journal of Corporate Law Studies, 19(1), 137–66.Google Scholar

Wedderburn, K. W. (1957). Shareholders’ rights and the rule in Foss v. Harbottle. Cambridge Law Journal, 15(2), 194–215.Google Scholar

Zalecki, P. H. (1993). The corporate governance roles of the inside and outside directors. University of Toledo Law Review, 24, 831–58.Google Scholar

Zhao, J. (2019). Extraterritorial attempts at addressing challenges to corporate sustainability. In Sjåfjell, B. and Brunner, C. M., eds., Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability. Cambridge: Cambridge University Press, pp. 29–42.Google Scholar

Accessibility standard: Unknown

Why this information is here

This section outlines the accessibility features of this content - including support for screen readers, full keyboard navigation and high-contrast display options. This may not be relevant for you.

Accessibility Information

Accessibility compliance for the HTML of this chapter is currently unknown and may be updated in the future.