Preview

Legitimacy Theory

Powerful Essays
Open Document
Open Document
2917 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Legitimacy Theory
Refinements to Legitimacy Theory in Social and Environmental Accounting
Matthew V. 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.

COMMERCE RESEARCH PAPER SERIES NO. 04-6 ISSN: 1441-3906

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. 574, emphasis in original) Legitimacy theory has become one of the most cited theories within the social and environmental accounting area. Yet there remains deep scepticism amongst many researchers that it offers any real insight into the voluntary disclosures of corporations. This brief paper outlines responses to two specific concerns identified in the literature. It will eventually form part of a much larger project addressing a range of issues associated with legitimacy theory. First, the paper brings some of the more recent developments in the management and ethical literature on legitimacy and corporations to the accounting table. Second, there are contributions to the theory that have already been made by accounting researchers that are yet to be fully recognised. The author believes that legitimacy theory does offer a powerful mechanism for understanding voluntary social and environmental disclosures made by corporations, and that this understanding would provide a vehicle for engaging in critical public debate. The problem for legitimacy theory in contributing to our understanding of accounting disclosure specifically, and as a theory in general, is that the term has on occasion been used fairly loosely. This is not a problem of the theory itself, and the observation could be equally applied to a range of theories in a range of disciplines (see for example Caudill (1997) on the abuse of Evolutionary



References: Ashford, B. E. and B. W. Gibbs (1990) “The Double-Edge of Organizational Legitimation”, Organization Science, Vol. 1, No. 2, pp. 177 - 194. Caudill, E. (1997) Darwinian Myths: The Legends and Misuses of a Theory, Knoxville, University of Tennessee Press. Deegan, C., M. Rankin and J. Tobin (2002) “An Examination of the Corporate Social and Environmental Disclosures of BHP from 1983-1997: A Test of Legitimacy Theory”, Accounting, Auditing and Accountability Journal, Vol. 15, No. 3, pp. 312 - 343. Deegan, C., M. Rankin and P. Voght (2000) “Firms’ Disclosure Reactions to Major Social Incidents: Australian Evidence”, Accounting Forum, Vol. 24, No. 1, pp. 101 - 130. Hearit, K. M. (1995) “‘Mistakes Were Made’: Organizations, Apologia, and Crises of Social Legitimacy”, Communication Studies, Vol. 46, No. 1-2, pp. 1 - 17. Hybels, R. C. (1995) “On Legitimacy, Legitimation, and Organizations: A Critical Review and Integrative Theoretical Model”, Academy of Management Journal, Special Issue: Best Papers Proceedings, 1995, pp. 241 - 245. Kaplan, S. E. and R. G. Ruland (1991) “Positive Theory, Rationality and Accounting Regulation”, Critical Perspectives on Accounting, Vol. 2, No. 4, pp. 361 374. Lindblom, C. K. (1994), “The Implications of Organizational Legitimacy for Corporate Social Performance and Disclosure”, Critical Perspectives on Accounting Conference, New York. Mathews, M. R. (1993) Socially Responsible Accounting, UK, Chapman & Hall. Neu, D., H. Warsame and K. Pedwell (1998) “Managing Public Impressions: Environmental Disclosures in Annual Reports”, Accounting, Organizations and Society, Vol. 23, No. 3, pp. 265 - 282. O’Donovan, G. (2002) “Environmental Disclosures in the Annual Report: Extending the Applicability and Predictive Power of Legitimacy Theory”, Accounting, Auditing and Accountability, Vol. 15, No. 3, pp. 344 - 371. Patten, D. M. (2002) “Media Exposure, Public Policy Pressure, and Environmental Disclosure: An Examination of the Impact of Tri Data Availability”, Accounting Forum, Vol. 26, No. 2, pp. 152 - 171. Suchman, M. C. (1995) “Managing Legitimacy: Strategic and Institutional Approaches”, Academy of Management Journal, Vol. 20, No. 3, pp. 571 610. Tilling, M. (2004), “Communication at the Edge: Voluntary Social and Environmental Reporting in the Annual Report of a Legitimacy Threatened Corporation”. APIRA Conference Proceedings, Singapore, July.

You May Also Find These Documents Helpful

  • Powerful Essays

    Legt1710

    • 2593 Words
    • 11 Pages

    © 2013 The University of New South Wales Sydney 2052 Australia The original material prepared for this guide is copyright. Apart from fair dealing for the purposes of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission. Enquiries should be addressed to the Head of School, Taxation and Business Law, UNSW, Sydney…

    • 2593 Words
    • 11 Pages
    Powerful Essays
  • Powerful Essays

    Reputation management has therefore become an important part of doing business. But reputation management is often a public relations activity that has little to do with social responsibility. Instead, corporations spend much effort and money on creating the impression of responsibility. They gain credibility for their claims of responsibility through token reforms, codes of conduct and by aligning themselves with amenable environmental and human rights groups as well as specially created coalitions of such groups (Beder 2000, chapter 8).…

    • 7196 Words
    • 29 Pages
    Powerful Essays
  • Powerful Essays

    Copyright  2002 The Canadian Institute of Chartered Accountants 277 Wellington Street West, Toronto, Canada M5V 3H2 Printed and bound in Canada…

    • 55245 Words
    • 221 Pages
    Powerful Essays
  • Powerful Essays

    Auditing Research

    • 5043 Words
    • 21 Pages

    Holder-Webb, L., Cohen, J., Nath, L., & Wood, D. (2008). The supply of corporate social responsibility disclosures among U.S. firms. Journal of Business Ethics, 497-527.…

    • 5043 Words
    • 21 Pages
    Powerful Essays
  • Powerful Essays

    It was not until recently that accounting and reporting acquired 3 new aspects to it, organisations are now being expected to be embracing Corporate Social Responsibility. This entails social and environmental reporting as well as having a well formulated code of ethics. In this essay I will be exploring the concepts, benefits, and drawbacks of Ethical, Social, and Environmental Accounting and Reporting.…

    • 2193 Words
    • 9 Pages
    Powerful Essays
  • Powerful Essays

    Corporate social reporting is consequent to increasing globalisation, greater environmental and social awareness, and more efficient communication, the concept of companies’ responsibilities beyond the purely legal or profit-related has gained new impetus. In order to succeed, business now has to be seen to be acting responsibly towards people, planet and profit.…

    • 2254 Words
    • 10 Pages
    Powerful Essays
  • Best Essays

    There will also be a brief history of stakeholder theory and its role in explaining the motivation for corporate social disclosures. There are two theories which are offered to describe the phenomena of motivation for the corporate social disclosures. First one is managerial stakeholder theory and another is legitimacy theory. Legitimacy theory is not our concern here as it says that corporate social disclosures are voluntary in nature and are part of process of legitimating (Crane & Ruebottom 2011).…

    • 2985 Words
    • 12 Pages
    Best Essays
  • Powerful Essays

    Accounting Policies

    • 3325 Words
    • 14 Pages

    Sinha, S 2008, ‘Positive Accounting Theory: A Critique’, ICFAI Journal of Accounting Research, vol. 7, no. 4, pp. 7-16, retrieved 2 May 2012, EBSCOhost database.…

    • 3325 Words
    • 14 Pages
    Powerful Essays
  • Powerful Essays

    Environmental Impact

    • 1839 Words
    • 8 Pages

    . Dawkins, C., & Fraas, J. (2011). Coming Clean:The Impact of Environmental Performance and Visibility on Corporate Climate Change Disclosure. Journal Of Business Ethics, 100(2), 303-322. doi:10.1007/s10551-010-0681-0…

    • 1839 Words
    • 8 Pages
    Powerful Essays
  • Better Essays

    Legitimacy enables a state to depend not on shear force or coercion, rather the idea of consent of the governed. Consent of the governed is a principle that goes back to the English philosopher John Locke, stating that a government's legitimacy and moral right to use state power is justified and legal when it is consented by the people or society that the power is being exercised over. Consequently, this makes legitimacy an integral component of any successful modern state. Various forms of political organizations can be affiliated with the few basic forms of legitimacy. Legitimacy has also transformed into a key to assist in explaining the rise and decay of electoral and authoritarian regimes. Said regimes can instruct states and construct…

    • 1364 Words
    • 6 Pages
    Better Essays
  • Best Essays

    Clacher, I. and Hagendorff, J. (2012) Do Announcements About Corporate Social Responsibility Create or Destroy Shareholder Wealth? Evidence from the UK, Journal of Business Ethics, 106:253–266.…

    • 359 Words
    • 2 Pages
    Best Essays
  • Satisfactory Essays

    Given the cost of non-conformance, corporations engage in strategies to ‘legitimize’ their activities in the eye of society. This process, known as legitimation involves disclosures either through annual reports or public announcements. Such disclosures act as tools to educate or manage the perception of society, and thus disclosure policies are frequently established to meet society's norms.…

    • 368 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Within both legitmacy theory and Stakeholder theory, accounting disclosure polices are considered to constitute a strategy to influence the organisation’s relationships with the other parties with which it interacts.…

    • 1877 Words
    • 8 Pages
    Powerful Essays
  • Good Essays

    Accounting researchers tend to accept current accounting systems. Rather than focusing on why accounting systems favour certain classes of society, research is mainly carried out to such things as what accounting methods are most appropriate in certain circumstances, what motivates managers to use one accounting method over another and disclosure. By looking at accounting with a critical perspective is to recognise the way in which people are in control of capital. The Positive Accounting Theory (PAT) and Legitimacy Theory can be analysed critically for their bias approach of a political and economic perspective disregarding those people without wealth.…

    • 452 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Cited: Suchman, M.C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review20 (3): 571-610.…

    • 1286 Words
    • 6 Pages
    Good Essays