The Mediating Effect of Corporate Social Responsibility on Corporate Governance and Corporate Performance

The purpose of this study is to investigate how corporate governance influences corporate performance through corporate social responsibility. In this study, the companies assessed with the corporate governance ratings and KEJI indices for 5 years ranging from 2004 through 2008 were analyzed in order to verify the relations among the corporate governance and corporate social responsibility and corporate performance. For the corporate governance data, KCGS data were adopted while KEJI data for the corporate social responsibility. ROA and ROE of each individual company were used for the corporate performance. As independent variables, corporate governance and corporate social responsibility and corporate performance were assumed to have affects on each other under time difference, not concurrently. The corporate governance data were from 2004 through 2007, and the corporate social responsibility data were from 2005 through 2008, and the corporate performance data were those from 2005 through 2009. The analysis revealed that, firstly, the corporate governance has a positive influence on the corporate social responsibility; secondly, the corporate social responsibility has a positive influence on the corporate performance such as ROA and ROE, and third, corporate social responsibility mediates the relationship between corporate governance and corporate performance, which may explain the direct interrelations of corporate governance and corporate performance in detail out of the long debates in the business administration. The results imply that the corporate strategic decision making such as ethical management under appropriate governance structure influences the corporate performance more, rather than they are directly related each other.