Corporate Governance Article Example | Topics and Well Written Essays - 1250 words

Corporate Governance - Article Example Resource dependence theory posits that dependent directors are more resourceful through providing advice, communication channels to the external environment, legitimacy, and commitment preference but empirical studies have shown that there is no direct relation between dependence and financial performance. The conclusion is for an inclusion of independent directors on boards on CSR as they relate the changing needs of directors and is sensitive to social needs; provide more resources and legitimacy to the board. An inclusion of female and minority directors on boards advocating have increased with the reasoning based on equity and fairness, reflect racially, and gender diversity of employees, customers, and other stakeholders. Agency theory suggests the inclusion of minority and female directors that board diversity augments independence increasing ability to monitor management. Resource dependence theory supports the inclusion of female and minority directors on the basis that it in creases resources brought by each board members and augments access to external resources. Both agency and resource dependence theory and other theories are in favor of female and minority directors increasing CSR. An inclusion of stakeholder directors is advocated by resource dependence theory and not touched on by agency theory with the reasoning being employee directors increase board efficiency by incorporating company information. Stakeholder director inclusion leads to recognition of stakeholder issues; hence CSR.