Do corporate social responsibility (CSR) reports provide shareholders Essay - 7

Do corporate social responsibility (CSR) reports provide shareholders and stakeholders with useful information on corporate soci - Essay voiceThe gaining momentum of CSR activities is evident from the fact that many mergers and acquisition dealings are excessively viewing investments in such activities as a factor for amity prior to finalising the deal. Despite such growth in the value of CSR activities, the question as to why managers find it important to undertake these activities and whether there is any have for engage in these activities apart from maintain good public image (Font et al., 2012). There are multitude of problems in the business world which include explanation frauds and corporate irregularities and graver concerns like environmental issues and social obligations. In this regard, the paper discusses the importance of engagement of companies in a socially responsible behaviour and also illustrates reasons behind non engagement of few organizations in the same. The paper discusses evidence of non compliance and lack of belief in CSR initiative in firms and concludes in discussion of relevancy of such CSR initiatives in todays world. Importance of Engaging in a Socially Responsible Behaviour CSR reporting that are now be mandated in firms by various controlling bodies are an attempt to legalise the concerns business activity while making it comply with various environmental, social and honorable issues. It is argued that voluntary as well as compulsory CSR reporting ensures competitive advantage of firms over those who do not engage in CSR reporting (Mahoney et al., 2013). The cyanuramide contamination trip of China was a shock for the entire world. It highlighted the need for investors to respond to a corporate social responsibility of companies towards its consumers. It is argued that a firms financial performance has direct bearing with consumer buying and selling activities and such immoral behaviours drop sales by drastic measures. In the similar way, the case of Coca Cola and Cadbury contamination brought forth an alarming situation of quality standards and norms that were practiced within the company. These events tarnished the brand name to such large extent that it needed years to gain back reputation and hence sales. Hence it is critical to understand the direct linkage between CSR performance and financial results (Kong, 2012). The importance of engaging in CSR activities can also be studied in light of most important financial decisions like a merger and how it furbish ups the decision and impact on shareholders during such events (Deng, Kang & Low, 2013). In support of shareholders value maximisation in engaging in a merger, the role of CSR activity has been explained as a trust building action among the stakeholders (Jo & Harjoto, 2011). This argument thus establishes that high socially responsible firms have greater support of shareholders and stakeholders which in turn guide towards firm profitab ility and long term efficiency in contrast to firms that maintain somewhat weak socially responsible image (Jensen, 2001). Evidence of expiration of view of CSR Corporate formation requires that companies make their activities more transparent, their activities more accountable and their business more socially responsibly. It is argued that companies engage in business ethics, corporate governance and social responsibility merely to gain legitimacy in business activities and they do not really care about what possible impacts these could have on their business activity (Brennan & Merkl-Davies, 2013). According to views of Milton Friedman, social