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. Legitimacy theory, stakeholder theory, corporate social disclosures. Encyclopedia of corporate social responsibility, pp. The most used points within the sa are the stakeholder theory, legitimacy theory, and agency theory.
Corporate social disclosures csd are primarily voluntary in nature and as such provide fertile. Accounting for legitimacy harvard business school working. Concepts, evidence and implications by thomas donaldson and preston lee. Similarly, stakeholder theory is a theory which is used to explain the phenomena of motivation for corporate social disclosures. Legitimacy theory may provide useful insights for corporate social and. The role of legitimacy theory in explaining managers decisions is then.
Legitimacy is a generalised perceptual experience or premise that the actions of an entity are desirable. Evidence from china changes in value of the chinese market are much lower than changes in the markets values of other countries legitimacy theory is the theoretical basis in this article. Legitimacy theory, even if it is used for voluntary disclosure of social and. This in turn requires the adoption of a csr strategy affecting various areas of activity, including in particular management accounting. An overview of legitimacy theory as applied within the social and. Let us make indepth study of the concept definition, features and benefits of social accounting. Legitimacys very importance in socialenvironmental accounting. Different theories on sa have different points of reference. Social and environmental accounting sea has been defined by gray and al.
Legitimacy theory is based on the idea that a social contract exists between business. Accounting, auditing and accountability journal, 15 3, 312343. Conceptualizing legitimacy as a thing an asset or characteristic to be gained, increased and lost clearly emphasizes some attributes of a phenomenon at the. The roles of the social pillar and legitimacy theory in accounting 891 words 4 pages environmental pillar with the global warming and climate change posing imminent threat to the world, companies are now taking measures to reduce the negative impact to the environment caused by their organization. Theoretical perspectives on sustainability reporting. 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. Legitimacy theory is one of the most discussed theories to explain the phenomenon of voluntary social and environmental disclosures in corporate communication. Legitimacy theory has come to stress how corporate management will react to community expectations e. Because larger firms are assumed to face greater public pressures than smaller firms, a positive relationship between this variable and the extent of social disclosure is hypothesized. This chapter explores the notion of organisational legitimacy and emphasises that organisational legitimacy can be considered as a resource upon. In particular it discusses the consequences of the. 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. Legitimacy theory in management accounting research teoria. 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.
In our conception, legitimacy theory has the role of explaining the behavior of. Through this analysis, it is provided a better theoretical understanding of these theories, which. The articles thesis is that sustainable management accounting is a valuable tool of legitimacy for a socially responsible company. Corporate social responsibility and tax aggressiveness. 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. This book explores recent developments in the theory, strategic perspective and international practice of corporate social responsibility. Thus, the results reflect consistency between attitudes towards social accounting and actions, i. The role of theory in explaining motivation for corporate. In his new book political standards, karthik ramanna discusses thin markets and how they let bad regulation grow. Social disclosure, legitimacy theory and the role of. Keywords social accounting, disclosure, corporate strategy, automotive.
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. 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. Because social accounting is concerned with substantial selfreporting on a systemic level, individual reports are often referred to as social audits. An overview of legitimacy theory as applied within the social and environmental accounting literature available in the library and as an e book add to my bookmarks export citation. An overview of legitimacy theory as applied within the. Social accounting as the universe of all possible accountings gray et al. Exposure, legitimacy, and social disclosure sciencedirect. Legitimacy theory and environmental practices semantic scholar. Legitimacy theory as an explanatory theory of environmental disclosure hogner 1982 suggested corporate social disclosures were motivated by the corporate need to legitimise activities. Social accounting and the cocreation of corporate legitimacy. Legitimacy theory is based on the idea that a social contract exists between business and society. Social disclosure, legitimacy theory and the role of the state.
In doing so it first defines organizational legitimacy and describes how organizational legitimacy can be considered to be a resource that is necessary to the survival of an organisation. Hence, a novel application of legitimacy theory is. This study analyzes the perspectives of the institutional theory, the legitimacy theory, and the. Some thoughts on future research agenda april 6, 2017. Legitimacy theory has been utilized by researchers, particularly social and environmental accounting. 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. Refinements to legitimacy theory in social and environmental accounting matthew v.
Exposure, legitimacy, and social disclosure 303 the size measure used in my analysis is the natural log of 1985 revenues. This paper explores how social accounting can generate legitimacy for a company within a local community, and reveals the essential role of the community itself in the process. 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. The main assumption of legitimacy theory is fulfilling the organizations social contract, which enables the recognition of its objectives. Dec 28, 2016 an examination of the corporate social and environmental disclosures bhp from 19831997. The potential of discourse analysis dr helen tregidga faculty of business and law auckland university of technology private bag 92006 auckland 1142 new zealand tel.
A story of reporting social and environmental matters within the australian food and beverage industry professor james guthrie discipline of accounting, the university of sydney associate professor suresh cuganesan macquarie graduate school of management and leanne ward cocacola amatil corresponding author. Social accounting for the purpose of management control is designed to support and facilitate the achievement of an organizations own objectives. An overview of legitimacy theory as applied within the social and environmental accounting literature. As social contract plays an important role in legitimacy theory. The legitimacy theory and csr disclosure accounting essay. The objective is to explore how these theories are used in corporate social responsibility csr disclosure. 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.
The study examines a single industry within a single country. The legitimising effect of social and environmental. Sustainability accounting and accountability, routledge, new york, united states, pp. This book has a balanced discussion and critical evlaution of different theories of accounting, including positive accounting theory, political economy theory, stakeholder theory and legitimacy theory, as well as various normative theories of accounting. In our conception, legitimacy theory has the role of explaining the behavior of organizations in implementing and developing voluntary social and environmental disclosure of information in order to fulfill their social contract that enables the recognition of their objectives and the survival in a jumpy and turbulent environment. The roles of the social pillar and legitimacy theory in. Jan 21, 2015 legitimacy theory businessmarketing bibliographies in harvard style. The theories covered are institutional theory archel et al. Legitimacy theory specifies a social contract between the organisation and society. Application of social contract to legitimacy theory in.
The role of theory in explaining motivation for corporate social. Encyclopedia of corporate social responsibility pp. Positive accounting theory and normative accounting theory. A story of reporting social and environmental matters within the australian food and beverage industry professor james guthrie discipline of accounting, the university of sydney associate professor suresh cuganesan macquarie graduate school of management and leanne ward cocacola amatil corresponding authorprofessor james guthriediscipline of accountingthe university of.
The main aim of this thesis was to refine and develop legitimacy theory as an explanation for voluntary corporate envirormiental disclosures in the armual report. Legitimacy theory businessmarketing bibliographies cite. Stock markets reaction to disclosure of environmental violations. Legitimacy social accounting community bourdieu accountability symbolic power abstract this paper explores how social accounting can generate legitimacy for a company within a local community, and reveals the essential role of the community itself in the process. Apr 10, 2017 islam, muhammad azizul, csr reporting and legitimacy theory. A theoretical framework by thomas and lamm 2012, based on ajzens 2005 theory of planned behaviour and suchmans. This study analyzes the perspectives of the institutional theory, the legitimacy theory, and the stakeholders theory in the accounting changing process and sustainability reports. Organisational legitimacy ser and discourse september 09.
May 28, 2012 part a section i the articles chosen for this essay paper were corporate environmental reporting. Legitimacy theory overlapped stakeholders theory, intuitional theory and positive accounting theory which are discussed above. In our conception, the legitimacy theory is a mechanism that supports organisations in implementing and. 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. Business is a socioeconomic activity and it draws its inputs from the society, hence its objective should be the welfare of the society. We take an indepth case study approach using interviews with both company and community actors, supported by analysis of a nineyear social accounting series. The paper draws arguments from literature to identify the role of the legitimacy theory in management accounting research. Sciulli 2 considers that the phrase environmental and social accounting. Pdf legitimacy theory in management accounting research.
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