ACC620 Research: Legitimacy Theory & Environmental Concern

This research report explores how companies in Australia respond to increasing societal concern about the environment, using Legitimacy Theory as a framework. It reviews seminal articles on Legitimacy Theory and empirical research on company reactions to legitimacy threats. The report considers the potential threat to Australian companies from heightened environmental awareness and applies theoretical and empirical findings to predict their responses. It also proposes a methodology to test the predicted responses, emphasizing the importance of environmental disclosures and compliance with regulations to maintain organizational legitimacy and stakeholder support. The analysis suggests that companies are more likely to engage in environmental protection when faced with legal requirements and potential penalties, as failure to do so can lead to societal disapproval and financial repercussions. This creates a win-win situation for stakeholders, companies, and the environment, fostering responsible management and sustainable practices.

Accounting
Assignment

1
ACC620 Contemporary Issues in Accounting
Semester 3 2018
Research Proposal
Student Name:
Title:
Submission Date:
(Note that the due date is Friday 21 December 11.59 pm via SafeAssign)
Acknowledgement:
I certify that I have carefully reviewed the university’s academic misconduct policy. I understand
that the source of ideas must be referenced and that quotation marks and a reference are required
when directly quoting anyone else’s words.
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Table of Content
s
Introduction:...............................................................................................................................................3
Practical Motivation:...................................................................................................................................3
Literature Review:.......................................................................................................................................3
Proposition:.................................................................................................................................................5
Possible Methodology that could test the proposition:..............................................................................6
References...................................................................................................................................................7
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Introduction:
The research deals with environmental issues that people around the globe are facing and
how companies are contributing to it due to large scale development that is happening. The
research draws attention to the importance of environmental disclosures in the reports of the
companies so that awareness is spread on how companies are performing to protect the
environment and in ways they can make the necessary changes, so that interest can be generated
in stakeholders to consider this as an important criterion to take investment decisions (Abdullah
& Said, 2017).
Practical Motivation:
This is important in many ways for the stakeholders or the managers and the public as
environmental degradation can huge loss to the companies in many ways as the future would be
devoid of resources in many ways. We also see that environmental degradation is also affecting
the society and public (Boghossian, 2017). Like in the article related to carbon emission it shows
how much companies that are involved in activities such as mining are affecting the environment
through uncontrolled environmental emission and thus it becomes important that change should
be there with respect to a control with respect to protection of environment and taking care of the
same (Belton, 2017).
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Literature Review:
The first article “Introduction: The legitimizing effect of social and environmental
disclosures – a theoretical foundation” states that the organizations needs to deal with
environmental reporting and it is important to maintain organizational legitimacy. It draws the
importance to disclosures that can give the best information. This article draws the legitimacy
theory which helps in explaining the managers the importance of the same for companies
(Lindblom, 1994).
The second article “Legitimation strategies in Australian mining extended performance
reporting” states that social organizations along with companies need to obtain social approval
for their continued operations. The stakeholders have started giving importance to the social and
environmental performance of the companies and that has become an important part for them to
decide whether they want to invest in the companies or not. The companies also need to report
social and economic performance with respect to the public pressure for securing the right to
operate within the society (Tonganah & Guthrie, 2007).
The third article “Carbon Disclosures: Comparability, the Carbon Disclosure Project and the
Greenhouse Gas Protocol” deals with that corporate carbon disclosures have become an
important mechanism for taking internal and external decision making. The process of carbon
disclosures can help the companies in positioning themselves with respect to carbon monitoring
in the world. It is also said that this disclosures and importance to carbon monitoring would help
in sensitize the world to global environmental problems such as climate change and helps in
spreading awareness with respect to that. It also examines the carbon disclosures with respect to
Australian mining companies over three years in compliance with necessary carbon disclosure
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regime for the companies (Iggers, 2018). Thus, it helps in understanding the growth with respect
to disclosures and how many companies are following the same and take necessary decisions on
how to improve the situation and make sure that more and more companies are taking effective
participation (Andrew & Cortese, 2011).
There are lot of environmental issues that are apparent in towards world and companies are
highly getting affected by that. Environmental issues cause a lot of damage to the society like
there are issues with land management, waste disposal, over population, pollution, deforestation
and apparently lot of health issues for the public. Thus, to overcome that there have been rules
made that companies around the globe needs to follow and they need to give relevant disclosures
with respect to that in their reports for the stakeholders to follow. The stakeholders have stated
giving a lot of importance to societal and economic rules and take decisions based on that so in
case the companies need to follow the same else they will suffer and start following the reporting
requirements with respect to environmental frameworks and reporting that is required of them
(Kaufmann, 2017). Companies are failing because of the changing environment and the changing
scenarios and that has become a threat to survival and getting the necessary validation from the
companies as they are operating in the society and it is important to get validation from the same.
If they fail then they would not be able to survive as the stakeholders will not support the
company and fail on many grounds (Webster, 2017)
Proposition:
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The major proposition would be that companies around the globe would indulge in
environmental protection only if there is proper legal theories and rules that is important for them
to follow and in case they don’t it would lead to penalties.
Length: one or two sentences only.
Possible Methodology that could test the proposition:
Based on the overall analysis and research it can be said that companies have been
performing on many grounds to make sure that they are completing the reporting requirements
which is needed and also the companies are making sure that the steps that they are taking are as
per the needs of the stakeholders (Kaufmann, 2017). The companies will not get societal
validation in case they fail to that. We are also seeing based on the three articles that have been
discussed above that corporate disclosures are an important point for taking internal and external
decision making. It also highlights the importance of operational legitimacy for the companies on
many grounds. We thus see that in case the companies fail they would not get the necessary
support that they need from the stakeholders. Also, in case the companies fail, the companies
will be penalized in a legal way by the authorities (Iggers, 2018). The rules and regulations have
been framed after a lot of analysis and seeing the major affect that is being caused on the
environment due to the various activities that the companies are doing. Like the activities of the
mining companies is causing a very bad impact on the environment as it is causing a lot of land
and air pollution and it is causing a lot of effect on the health of the human beings and causing
environmental degradation. So, the aim should be that the companies need to be aware that they
do not cross the environmental limits that are within permissible limits by the authorities of the
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companies. Based on all this it can be said that companies have been taking a stand and making
sure that they are following the environmental norms which they should. This is because there is
a direct contact between the legitimacy theory and the stakeholder theory and stakeholders are
very important for the companies (Webster, 2017). As they are the ones who would be investing
in the company to generate profits, so we see that companies will respond in a positive manner to
the various issues of environmental reporting and state the same in their annual report (Coate &
Mitschow, 2017). This would give the stakeholders the much-needed information about the rules
that the companies are following and how much they are concerned about the environmental
regulations and rules and taking necessary steps with respect to that. This would give them social
validation and prompt stakeholders to invest in the company and help in establishing
responsibility of the management of the company with following the rules and regulations for the
organizations on many grounds. This is a win-win situation for the stakeholders, the companies
and the society in which the companies are operating (Charles H, et al., 2015).
References
Abdullah, W. & Said, R., 2017. Religious, Educational Background and Corporate Crime Tolerance by
Accounting Professionals. State-of-the-Art Theories and Empirical Evidence, pp. 129-149.
Andrew, J. and Cortese, C. L. (2011) Carbon disclosures: comparability, the Carbon Disclosure Project
and the Greenhouse Gas Protocol, Australian Accounting Business and Finance Journal, Vol 5(4) pp. 5-
18
Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat
International ltd.
Boghossian, P., 2017. The Socratic method, defeasibility, and doxastic responsibility. Educational
Philosophy and Theory, 50(3), pp. 244-253.
Charles H, C., Giovanna, M., Dennis M, P. & Robin W, R., 2015. CSR disclosure: the more things
change…?. Accounting, Auditing & Accountability Journal, 28(1), pp. 14-35.
Coate, C. & Mitschow, M., 2017. Luca Pacioli and the Role of Accounting and Business: Early Lessons
in Social Responsibility. s.l.:s.n.
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Iggers, J., 2018. Good News, Bad News: Journalism Ethics And The Public Interest. s.l.:s.n.
Kaufmann, W., 2017. The Problem of Regulatory Unreasonableness. First ed. New York: Routledge.
Lindblom, C. K., (1994) ‘The implications of organisational legitimacy for corporate social performance
and disclosure’, paper presented to the Critical Perspectives on Accounting Conference, New York, NY
Webster, T., 2017. Successful Ethical Decision-Making Practices from the Professional
Accountants' Perspective. ProQuest Dissertations Publishing.
Yongvanich, K. and Guthrie, J. (2007) ‘Legitimation strategies in Australian mining; extended
performance reporting ‘ , Journal of Human Resource Costing and Accounting, Volume 11,
Issue 3, pp. 156-177
Appendix:
The first article “Introduction: The legitimizing effect of social and environmental disclosures –
a theoretical foundation” states that the organizations needs to deal with environmental reporting
and it is important to maintain organizational legitimacy. It draws the importance to disclosures
that can give the best information. The second article “Legitimation strategies in Australian
mining extended performance reporting” states that social organizations along with companies
need to obtain social approval for their continued operations. The stakeholders have started
giving importance to the social and environmental performance of the companies and that has
become an important part for them to decide whether they want to invest in the companies or not.
The third article “Carbon Disclosures: Comparability, the Carbon Disclosure Project and the
Greenhouse Gas Protocol” deals with that corporate carbon disclosures have become an
important mechanism for taking internal and external decision making. The process of carbon
disclosures can help the companies in positioning themselves with respect to carbon monitoring
in the world. It is also said that this disclosures and importance to carbon monitoring would help
in sensitize the world to global environmental problems such as climate change and helps in
spreading awareness with respect to that. The fourth article deals with the importance of CSR
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disclosures that companies need to do and it is mandatory, and the pros and cons of it. (Charles
H, et al., 2015). The fifth article deals with role of accounting in social responsibility and how it
affects the companies (Coate & Mitschow, 2017)
Author Date Title Journal Type of
Paper
(Theoretic
al or
Empirical)
If
empirica
l,
research
method
and
sample
If
empirical,
dependent
and
independe
nt
variables
100-word
summary of
contribution
to the
research
question
C.K.
Lindblom
199
4
The
implications
of
organisation
al legitimacy
for
corporate
social
performanc
e and
disclosure
Critical
Perspectiv
es on
Accountin
g
Conferenc
e
Theoretic
al
The
first article
“Introductio
n: The
legitimizing
effect of
social and
environment
al
disclosures –
a theoretical
foundation”
states that
the
organization
s needs to
deal with
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environment
al reporting
and it is
important to
maintain
organization
al
legitimacy. It
draws the
importance
to
disclosures
that can give
the best
information.
This article
draws the
legitimacy
theory which
helps in
explaining
the managers
the
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importance
of the same
for
companies(
Lindblom,
1994).
There
are few
mandatory
environment
al
disclosures
that
companies
need to
follow and
interpret the
same in their
reports and
disclose it
appropriately
for the
investors and
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