Social disclosure, legitimacy theory and the role of the state 2009 acc auditing accountability j. The cambridge handbook of stakeholder theory edited by jeffrey s. As given in the assignment, it is stated that organizations sometimes voluntarily provide information in their annual reports which is not mandatory. Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions suchman, 1995, p. An overview of legitimacy theory as applied within the social and. Legitimacy theory legitimacy theory has its foundations in the theoretical paradigm of political economy. Encyclopedia of corporate social responsibility pp. The legitimacy theory has a very rich disciplinary background based on management theory, institutional. The basis of the social contract either expressed or implied on. Legitimacy theory is based on the idea that a social contract exists between business and society. This book covers the fundamentals of financial and managerial accounting.
The portrayal of accounting and accountants following the enron collapse garry d. The legitimacy theory posits that entities are bound by the social contract in which they agree to. The principal objective of this paper is to expand the scope of legitimacy theory lt through a detailed analysis of the links that exist between the legitimising strategies of firms and the characteristics of the political environment in which they are developed. An overview of legitimacy theory as applied within the social and environmental accounting literature deegan, c 2014, an overview of legitimacy theory as applied within the social and environmental accounting literature in jeffrey unerman, jan bebbington, brendan odwyer ed. Legitimacy theory may provide useful insights for corporate social and environmental. An overview of legitimacy theory as applied within the social and environmental accounting literature. While legitimacy theory suggests csr disclosures are part of a process of. Tilling flinders university, south australia the author wishes to acknowledge the valuable support provided by the cpa australia in funding this research through their research grant scheme. This article offers a critical overview of the major normative theories of political legitimacy from the seventeenth century to the present day, with a special focus on the leading representatives of the social contract tradition. The ultimate theories in corporate governance started with the agency theory, extended into stewardship theory and stakeholder theory and evolved to resource dependency theory, political theory, legitimacy theory and social contract theory. Ncert books pdf free download for class 12, 11, 10, 9, 8, 7, 6, 5, 4, 3, 2, and 1 april 14, 2020 by kishen 16 comments there are many books in the market but ncert books. Positive accounting theory and normative accounting theory. Legitimacy theory is described by richardson 1987 as a means by which social values are linked to economic actions, in order to achieve harmony between corporate practices and the legitimacy of their existence. The study of accounting from the outside, accounting can appear to be a purely practical subject.
Refinements to legitimacy theory in social and environmental accounting. Pdf legitimacy theory in management accounting research. Social disclosure, legitimacy theory and the role of the. It should owe a responsibility towards solving many of the social problems. Ncert books pdf download 2020 for class 12, 11, 10, 9, 8.
We investigate the relationship between corporate social responsibility csr and corporate financial performance cfp in a developing country context using annual report data from a sample of 1 firms over a 5 year period 20082012. Pdf refinements to legitimacy theory in social and. Legitimacy theory overlapped stakeholders theory, intuitional theory and positive accounting theory which are discussed above. Thus, the results reflect consistency between attitudes towards social accounting and actions, i. When viewed as a process, however, legitimacy is not seen as the outcome of congruence but, rather, is a product of how that congruence is achieved. Preston university of maryland the stakeholder theory has been advanced and justified in the man agement literature on the basis of its descriptive accuracy, instrumen tal power, and normative validity. Let us make indepth study of the concept definition, features and benefits of social accounting. Legitimacy is about social, economic and political rights, and it is what transforms coercive capacity and personal influence into durable political authority.
This chapter provides an overview of legitimacy theory as applied within the social and environmental accounting literature. In terms of the future direction of the applicability of the legitimacy theory, there appears to be a number of subject areas or legitimacy threatening incidents to be researched within the context of. Email your librarian or administrator to recommend adding this book to your organisations collection. Sustainability accounting and accountability, routledge, new york, united states, pp. An overview of legitimacy theory as applied within the. Legitimacy theory posits that businesses are bound by the social contract in which the firms agree to perform various socially desired actions in return for approval of its objectives and other rewards, and this ultimately guarantees its continued existence. This book is specifically designed to appeal to both accounting and nonaccounting majors, exposing students to the core concepts of accounting in familiar ways to build a strong foundation that can be applied across business fields. The results of this study fail to confirm legitimacy theory as the primary explanation for social reporting in the australian case.
According to gray 2000, a broad definition of social accounting might be. Concepts, evidence, and implications thomas donaldson georgetown university lee e. Refinements to legitimacy theory in social and environmental accounting matthew v. Legitimacy theory businessmarketing bibliographies. Use features like bookmarks, note taking and highlighting while reading social compliance accounting. Wilmshurst and frost 2000 consider that legitimacy theory provides an. This in turn requires the adoption of a csr strategy affecting various areas of activity, including in particular management accounting. The theory in effect claims that because corporations have the resources, they should engage in social ventures. A theoretical framework by thomas and lamm 2012, based on ajzens 2005 theory of planned behaviour and suchmans. Legitimacy theory is a political theory and has implications on several business activities including accounting. Normally the legitimacy theory is used to explain social and environmental reports disclosure.
Business is a socioeconomic activity and it draws its inputs from the society, hence its objective should be the welfare of the society. Theoretical perspectives on sustainability reporting. Recent developments in social and environmental accounting. Application of social contract in legitimacy theory brings transparency in the system and helps the society as a whole in many ways as discussed above. The main assumption of legitimacy theory is fulfilling the organizations social contract, which enables the recognition of its objectives.
A combination of different theories like legitimacy theory. Keywords social accounting, disclosure, corporate strategy, automotive. Prestoncorporate social accounting reporting for the physical environment. Tsang 1998 use legitimacy theory to explain social and environmental reporting in china. According to legitimacy theory, companies disclose social responsibility information to present a socially responsible image so that they can legitimize their behaviours to their stakeholder groups. The relationship between legitimacy and resources attracted and still attracts the attentions of social and accounting researchers lindblom 1994. Through this analysis, it is provided a better theoretical understanding of these theories, which.
Legitimacy theory businessmarketing bibliographies in harvard style. Normative legitimacy and the state oxford handbooks. The unit is intended as a broad introduction to the subject, both for nonspecialist students, and as a foundation for further study in the area. This chapter explores the notion of organisational legitimacy and emphasises that organisational legitimacy can be considered as a resource upon which many organisations are dependent for their survival. Changes in social and environmental reporting practices in an emerging economy 20042007. Legitimacy theory and environmental practices semantic scholar.
Exposure, legitimacy, and social disclosure sciencedirect. A legitimation crisis is an identity crisis that results from a loss of confidence in administrative institutions, which occurs despite the fact that they still retain legal authority by which to govern. Corporate communication and impression management new. This study analyzes the perspectives of the institutional theory, the legitimacy theory, and the stakeholders theory in the accounting changing process and sustainability reports. Indeed, it is probable that legitimacy theory is the most widely used theory to explain environmental and social disclosures campbell, craven and shrives, 2003, p. A rebuttal of legitimacy theory, accounting and business research 1976, 343352. As social contract plays an important role in legitimacy theory. Legitimacy theory and stakeholder theory underpin the study. Exploring the relevance of stakeholder and legitimacy theories. Social values can be linked with economic actions with the help of accounting. A framework for social and environmental accounting research. Social disclosure, legitimacy theory and the role of. Legitimacy theory may provide useful insights for corporate social and environmental disclosures. Financial accounting theory, 4th edition, mcgraw hill book company.
Legitimacy theory is theory that, in the last decade, has become increasingly used by accounting researchers, particularly researchers working in the area of social and environmental accounting. Abstract various rationales have been advanced to explain the phenomenon of corporate social reporting. E book or pdf edited book email encyclopedia article govt. Social and political cost theory was used to explain csr disclosure in malaysia mohd and wazli, 2007. Financial accounting theory 4e legitimacy theory legitimacy theory is a widely used theory within legitimacy theory, organisations seek to ensure they operate within the bounds and norms of their respective societies that is, they want their activities to be perceived as legitimate bounds and. In terms of the future direction of the applicability of the legitimacy theory, there appears to be a number of subject areas or legitimacy threatening incidents to be researched within the context of developing nations.
The political economy paradigm suggests that the economic sphere may not be deliberated in separation from the political, social and institutional framework in which the economy is positioned gray et al. This essay explores recent trends in social and environmental accounting research sear. But the legitimacy theory can be used in corporate report, suggested by woodward et al. The objective is to explore how these theories are used in corporate social responsibility csr disclosure. Application of social contract to legitimacy theory in. An aspect of legitimacy theory, investigated in this research, is that in order to continue to exist a corporation will act to remain legitimate in the eyes of whom it considers is able to. These theories, it is argued, explain the limitations of the role of social and environmental accounting in terms of. A very commonly used positive theory in the world of accountancy is the legitimacy theory. Free accounting books download ebooks online textbooks. Download it once and read it on your kindle device, pc, phones or tablets. In our conception, legitimacy theory has the role of explaining the behavior of organizations in implementing and developing voluntary social and. This study examines whether the voluntary social disclosures included by corporations in their. In addition, legitimacy theory maintains that larger firms have a greater responsibility than smaller firms.
A variable but significant pattern of social reporting is identified and compared with an earlier study of social reporting by us steel. The sme managers were found to have a neutral attitude towards social accounting and they all engaged in practical actions rather than social impact measurement or social reporting. Islam, azizul 2017 csr reporting and legitimacy theory. This article presents the findings of an analysis of the role of internal social responsibility accounting sustainable management accounting in the light of legitimacy theory. The aim of this study is to explore the possibility of using the legitimacy theory as a plausible explanation for csr reporting practices by organizations within the context of developing nations. Corporate social responsibility as a legitimacy maintenance strategy in the professional accountancy firm.
Environmental accounting disclosure practice of nigerian. Legitimacy lies at the heart of all political discourse and determines much political competition in both developed and less developed societies. What is legitimacy and why does it matter for peace. Strategically speaking, the sustainability of legitimacy theory is based on the. Intraindustry environmental disclosures in response to. This subject guide is written for those of you who are studying principles of accounting. Ramanathantoward a theory of corporate social accounting. Legitimacy theory is derived from the positive approach to the development of accounting theory and helps in explaining and determining the legitimacy of the behavior of organizations. If social accounting is anything, it is the opening up of new spaces, of new accountings, not.
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