ACCOUNTING THEORY.

Running Head: ACCOUNTING THEORY
ACCOUNTING THEORY
Name of the Student
Name of the University
Author Note

1ACCOUNTING THEORY
Table of Contents
Summary....................................................................................................................................2
Legitimacy Theory.....................................................................................................................2
Relationship between Article and the Theory............................................................................3
Conclusion..................................................................................................................................4
Reference....................................................................................................................................5

2ACCOUNTING THEORY
Summary
Smoking of Marijuana during the interview has plunged the shares of Tesla
The shares of the company dropped by 9 percent after the consumption of marijuana
and irrelevant comment made by the chief executive of the company who is Elon Musk,
during the interview with the Joe Rogan. In addition, the shares have drooped also due to by
the resignation by the top executives of the company such as accounting chief Dave Morton
and head of human resources Gabrielle Toledano. The tension among the board of Tesla
has triggered due to tweets made by Elon Mask and the subsequent investigations. All these
incidents have raised serious concerns for the company and resulted in the dropping of
shares, manufacturing delays and federal investigations ("Tesla stock closes down 6% after
top executives resign and Elon Musk smokes weed on video", 2019).
Legitimacy Theory
The theory of legitimacy is defined as the mechanism which supports the
organizations in developing voluntary social, implementing as well as environmental
disclosures for fulfilling their social contract which enables in recognizing their objectives as
well as survival in the turbulent and jumpy environment. It is the assumption or the
generalized perception that the action of the organization are proper, desirable and
appropriate within the socially constructed norms , beliefs, values as well as definitions
(Fernando & Lawrence, 2014). In addition, it also highlights the degree to which the
corporate environmental and social disclosures are affected by the established boundaries by
the society for appreciating and avoiding the penalty imposed by the community where the
company is operating. The company has to justify their existence by the legitimate social and
economical actions, which does not jeopardize the society’s existence where it carries on, not
the environment (Hummel & Schlick, 2016).