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Corporate Social Responsibility as a Strategy Tool to Increase Shareholder Value - Research Paper Example

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This paper sought to establish the extent to which CSR affects the shareholders’ value. The paper has shown that CSR leads to value creation, as well as destruction. CSR creates value through its voluntary disclosure by entities, enhancing cost reduction, improving revenues, and reducing risks…
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Corporate Social Responsibility as a Strategy Tool to Increase Shareholder Value
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Download file to see previous pages The CSR is defined as actions that corporations engage in to further some social good, and which are beyond the firms’ interest and are legally required. It is also viewed as achieving commercial success through means that honor ethical values and people, communities, as well as the natural environment. In broader terms, the CSR denotes a comprehensive set of policies, programs, and practices that are integrated into the business strategies and decision-making processes and include issues related to governance, human rights, environmental concerns, community investment, business ethics, the marketplace, and the workplace. This concept receives different views from its supporters and detractors. Broadly, those against it, use the classical economic arguments as put by Milton Friedman; that the management should serve to maximize the shareholder's profits. This is different from the CSR practices that serve many stakeholders. The second objection is that business managers are not meant to handle social activities as they lack social skills and should handle financial and operational matters. The third objection is that the engagement in social activities dilutes the business’s primary purpose. On the other hand, the proponents of CSR argue that CSR practices are useful for a business that would want to function in the future since it makes it create a healthy climate. The next support for CSR is that government regulation is reduced, and the companies have the necessary and adequate resources to fulfill society’s expectations of it. Another argument for CSR is that being proactive is better than being reactive because being proactive helps an organization to plan and is less costly than reacting to social problems after they have occurred. ...Download file to see next pagesRead More
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