A story of reporting social and environmental matters within the australian food and beverage industry july 5, 2007. 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. Financial accounting theory craig deegan 4th edition 4e. With respect to political theory, a state is perceived as being legitimate when its citizens treat it as properly holding and exercising political power. Text and cases, 12th edition continues to concentrate on showing readers how accounting standards directly affect daily decision making on the job. Pdf financial accounting theory download full pdf book. Legitimacy theory is based on the idea that a social contract exists between business and society.
Dec 28, 2016 an examination of the corporate social and environmental disclosures bhp from 19831997. This chapter locates the problem of government illegitimacy within the range of problems addressed by political theory. Legitimacy theory is one of the most discussed theories to explain the phenomenon of voluntary social and environmental disclosures in corporate communication. According to gray 2000, a broad definition of social accounting might be. 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. The role of theory in explaining motivation for corporate social.
We hope that you will use the guide to carry out social accounting in your community organisation or enterprise. An organization may diverge dramatically from societal norms yet retain legitimacy because the divergence goes unnoticed. A stakeholder approach, and identifies and models the groups which are stakeholders of a corporation, and both describes and. Business is a socioeconomic activity and it draws its inputs from the society, hence its objective should be the welfare of the society. Legitimacy theory specifies a social contract between the organisation and society. 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. 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.
We take an indepth case study approach using interviews with both company and community actors, supported by analysis of a nineyear social accounting series. Herremans, 1993 with increasing subtlety and theoretical sophistication see. The stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization. In his new book political standards, karthik ramanna discusses thin markets and how they let bad regulation grow. It also outlines the question of legitimacy, differentiating between the problems posed by illegitimate states, illegitimate governments, and violations of. A variable but significant pattern of social reporting is identified and compared with an earlier study of social reporting by us steel. Download pdf financialaccountingtheory free online new.
Organisational legitimacy ser and discourse september 09. While the term exists beyond the political realm, as it encompasses sociology, philosophy, and psychology, legitimacy is often referred to with respect to actors, institutions, and the political orders they constitute. The legitimacy of accountants participation in social and. This chapter provides an overview of legitimacy theory as applied within the social and environmental accounting literature. The legitimacy of accountants participation in social and ethical accounting, auditing and reporting brendan odwyer introduction the recent resurgence of interest in social and ethical accounting, auditing and reporting seaar, particularly in the uk, is now well documented swift and pritchard 2000. Pdf the legitimacy of the international integrated. Social accounting also known as social accounting and auditing, social accountability, social and environmental accounting, corporate social reporting, corporate social responsibility reporting, nonfinancial reporting or accounting is the process of communicating the social and environmental effects of organizations economic actions to particular interest groups within society and to. Refinements to legitimacy theory in social and environmental accounting. E book or pdf edited book email encyclopedia article govt. Sustainability accounting and accountability, routledge, new york, united states, pp. Legitimation crisis refers to a decline in the confidence of administrative functions, institutions, or leadership. 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. The purpose of this paper is to provide an extensive and critical overview of the theoretical perspectives used in the accounting disclosure literature including economic theories, political and social theories.
In todays era, application of social contract to legitimacy theory in accounting plays an important role as it provide satisfaction that organizations actions are appropriate and desirable without harming the interest of the society. Legitimacy is a perception or assumption in that it represents a reaction of observers to the organization as they see it. A reply to corporate social responsibility and tax aggressiveness. Pdf refinements to legitimacy theory in social and. We begin by briefly examining the relationship between accounting theory and the institutional structure of accounting. Legitimacy is used here to mean that quality of a rule which derives from a. Legitimacy theory as an explanatory theory of environmental disclosure hogner 1982 suggested corporate social disclosures were motivated by the corporate need to legitimise activities. Theoretical approaches to the development of an accounting theory are many but belkaoui, in his text accounting theory, categorizes these as. In our conception, legitimacy theory has the role of explaining the behavior of organizations in implementing and developing voluntary social. It should owe a responsibility towards solving many of the social problems.
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. 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. From legitimacy to accounting and auditing for citizenship. 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. The study provides evidence to show that the 2002 special issue was significant within the context of aaaj, and also within the context of the evolution of the social and environmental accounting literature. 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. A comparison of these distinct approaches allows us to explain the process, both in implicit and explicit ways at different levels of analysis, through which a social object is construed as legitimate. Social accounting as the universe of all possible accountings gray et al. This paper discusses the legitimacy of accountants recent involvement in social and ethical accounting, auditing and reporting seaar. Based on deliberations on the legitimacy of csr from the perspective of stakeholder and legitimacy theory on the one hand and the more critical view of milton friedman and michael jenson on the other hand, this paper analyses how major energy companies legitimise their csr activities in their annual reports and their csr reports.
Legal legitimacy in theoretical perspective oxford. One of the objectives of this book is to assess the influence of accounting theory on the rulemaking process. Accounting for legitimacy harvard business school working. Legitimacy theory and its relationship to csr disclosures. In our conception, legitimacy theory has the role of explaining the behavior of organizations in. Social disclosure, legitimacy theory and the role of the state 2009 acc auditing accountability j.
The new edition of this text has been updated and revised to provide students and professionals with the theoretical background they need to keep up with. Encyclopedia of corporate social responsibility pp. Concepts, evidence and implications by thomas donaldson and preston lee. The legitimacy theory posits that entities are bound by the social contract in which they agree to. Thus, the results reflect consistency between attitudes towards social accounting and actions, i. Aug 08, 2015 financial accounting theory craig deegan 4th edition 4e. 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. Legitimacy theory legitimacy theory has its foundations in the theoretical paradigm of political economy.
The contemporary version of the social contract theory revisited by john rawls 1999 in a theory of justice, wants to demonstrate that individual and social group rights and liberties are founded on mutually advantageous agreements which are made between members of society. Presented to the 5th asian pacific interdisciplinary research in accounting apira conference, 810 july 2007, auckland, new zealand. Social accounting also known as social accounting and auditing, social accountability, social and environmental accounting, corporate social reporting, corporate social responsibility reporting, nonfinancial reporting or accounting is the process of communicating the social and environmental effects of organizations economic actions to particular interest groups within. 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, small to medium sized enterprises, corporate social. This book, first published in 2001, summarizes and integrates the best social scientific research in a previously neglected but rapidly emerging interdisciplinary field seeking to understand processes of legitimation and delegitimation in social relations. Habermas expanded upon the concept, claiming that with a legitimation crisis, an institution or organization does not have the administrative capabilities to maintain or establish. Pdf legitimacy theory and its relationship to csr disclosures a. 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. Pdf our research is focused on the organizational legitimacy gained by the international integrated reporting council iirc. These examples illustrate the raising awareness of accounting and auditing for citizenship. 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 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.
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. An examination of the corporate social and environmental disclosures bhp from 19831997. Pdf legitimacy theory in management accounting research. The results of this study fail to confirm legitimacy theory as the primary explanation for social reporting in the australian case. It introduces the normative considerations affecting determinations of the legitimacy of ruling authority. Pdf to various researchers from the arena of business and. Some thoughts on future research agenda april 6, 2017.
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 description of the history of the development of legitimacy theory, and of the theorys subsequent application, provides a solid impetus for. Legitimacy theory businessmarketing bibliographies. This chapter explores the notion of organisational legitimacy and emphasises that organisational legitimacy can be considered as a resource upon. Cuganesan, suresh and ward, leanne and guthrie, james, legitimacy theory. Legitimacy theory and its relationship t o csr disclosures. Contributors are leading researchers in sociology, psychology, political science, and organizational behavior. In the next part of the paper the legitimacy theory was presented. The study examines a single industry within a single country. 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 businessmarketing bibliographies cite. We hope that the guide confirms what youve already thought about social accounting even in the back of your mind, and helps to put some structure and background around these thoughts. Legitimacy theory, stakeholder theory, corporate social disclosures. Stock markets reaction to disclosure of environmental violations. Download pdf financialaccountingtheory free online. Support for accountants legitimacy is proposed by highlighting some of the technical skills they offer to the seaar process as conceived in aa.
Social accounting and the cocreation of corporate legitimacy. An overview of legitimacy theory as applied within the social and. Normative legitimacy and the state oxford handbooks. Hence, the approach adopted here is concerned with the. 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. The legitimacy theory and csr disclosure accounting essay. 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. But he focuses on the context of accounting rules in his book, culled from a decade of research on the topic.
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. 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. Apr 10, 2017 islam, muhammad azizul, csr reporting and legitimacy theory. Pdf suchman 1995 legitimacy theory free download pdf.