Rationale: Why corporate management might elect to voluntarily provide particular information to parties outside the organisation. (Page 250 & 251)
Gray, Owen and Adams (1996):
Legitimacy Theory and Stakeholder Theory are two theorietical perspectives that have been adopted by a number of researchers in recent years. The theories are sometimes referred to as “systems-oriented theories”.
Within a systems-based perspective, the entity is assumed to be influenced by, and in turn to have influence upon, the society in which it operates.
Within both legitmacy theory and Stakeholder theory, accounting disclosure polices are considered to constitute a strategy to influence the …show more content…
Disclosure and Accounting report
Classical political economy tends to perceive accounting reports and disclosure as a means of maintaining the favoured positon of those who control scarce resources (captial), and as a means of undermining the position of those without scarce capital. “It focuses on the structural conflicts within society”.
Bourgeois political economy does not explictly consider structural conflicts and class struggles but rather ‘tends to be concerned with interaction between groups in an essentially pluralistic world.
It is this branc of Political Economy Theory from which Legitimacy Theory and Stakeholder Theory derive.
Chapter 8 – Systems oriented theories
3. Legitmacy Theory (page 253 to 258)
Legitimacy Theory asserts that organizations continally seek to ensure that they operate within the bounds and norms of their respective societies, that is, they attempt to ensure that their activities are perceived by outsdie parties as being “legitimate”.
These bounds and norms are not considered to be fixed, but rather, change over time, thereby requiring the organization to be responsive to the environment in which they operate.