StudentShare solutions
Triangle menu

Legitimacy Theory - Essay Example

Nobody downloaded yet

Extract of sample
Legitimacy Theory

Besides from this, there are other methods that can be adapted by the company to meet the expectations of the external environment and one of them is to increase external accountability.
The idea behind the concept of increasing external accountability is that organizations can enjoy a continued or higher degree of confidence (i.e. becomes more legitimate) from its external environment when it is more open to the scrutiny of the concerned external agents such as stakeholders and the government (Meyer 1979). To achieve this, they institute reforms in the organization's accounting practices. The logic between legitimacy and reforms in accounting practices that we have just discussed has been analyzed by scholars and some of them have expressed rather pressing and legitimate concerns.
Di Maggio and Powell (1983) argue that the need to project a positive image to achieve legitimacy give rise to inefficient reforms because the external environment may require conformity to symbolic elements that entails sacrifices in addressing technical requirements. The adoption and use of accounting practices perceived to enhance the organization's appearance of rationality and efficiency may even be symbolic, mythical or ceremonial. (Tolbert and Zucker, 1983: Covaleski, Dirsmith and Samuel, 1996). In the words of Meyer and Rowan (1977, p. 341), the accounting structure trying to satiate the external environment would "dramatically reflect the myths of their institutional environment instead of the demands of their work activities".
Empirical evidence of this resulting inefficiency abound especially those in the public sector. The study of Carpenter and Feroz (1992) suggests that the modification of accounting practices of government regulators who were keen to achieve legitimacy had improving actuarial accounting performance as a minor concern. This claim has been corroborated by the studies Matolcsy and Watts (2002) who conducted an examination of accounting reforms in Australian universities in the wake of Unified National System (UNS) of higher education in Australia. The conclusion further supported the notion that the reforms were symbolic.
Another issue surrounding the legitimacy theory and external accountability is the possibility that accounting firms would implement ways so as to make the report look more appeasing/pleasing to the external environment. This is what Andersen purportedly committed for its client, Enron. History tells us that Enron conducted a grand conspiracy of deceiving the public of its true value. Ashford and Gibbs (1990, p. 183) discussed the nature of legitimacy as being highly intense, defensive and reactive to internal and external threats.
In summary, the Legitimacy theory provides an initiative that will result in accounting practices that are geared primarily for satisfying the external environment thereby undermining what is needed to be implemented to satisfy more fully the technical requirements of accounting. To justify any claims with the use of the theory proven to be lacking would be detrimental to the flow of logic. Any claims would become invalid.
2.0 Criticisms of Positive Accounting Theory
In their scholarly work, Watts and Zimmerman (1978, p. 1978) laid the foundations of one of the best ...Show more


According to Suchman (1995, p. 574), Legitimacy theory is based on the idea that business ventures and even public organizations should conduct their operations in a way that is desirable, proper, congruent and conforming to the social norms, values and beliefs system present in their area of operations…
Author : ggislason
Legitimacy Theory essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Legitimacy Theory"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

The Effect of legitimacy theory in achieving profitability and sustainability in a corporation
The Effect of legitimacy theory in achieving profitability and sustainability in a corporation. The accounting profession has regarded itself as ethical sine the founding of the first modern professional body at the end of the 19th century. Ethical consideration within this profession have been improved because the ethics no longer rotate around the relationship between professional and client ,professionals and professional but also professional and society as a whole (Matwes,1995).
6 pages (1500 words) Essay
British Petroleum Oil Spill
British Petroleum Oil Spill, 2010 Student Name Instructor’s Name Course University Date of Submission Table of Contents 1. Introduction  1.1 Discussion of concepts and theories used to analyze the case  2. The case  2.1 Context  Background information about the case  2.2 Data  Description of corporate disclosure vehicles chosen for analysis 2.3 Methodology  Discussion of the categories of analysis used to analyze the corporate texts 3.
13 pages (3250 words) Essay
Financial Accounting theory and issues
This is necessary to achieve because of the perception that the venture gains legitimacy in the eyes of its external environment thereby ensuring the success and continuity of the endeavor. Oil corporations, for example, continue to enjoy huge profits
4 pages (1000 words) Essay
he strategically important aspects of legitimacy by focusing attention on the “congruence between social values and norms of acceptable behaviour” (Mathews, 1993, p.350). Therefore any divergence between the two value systems would imply a doubt about the legitimacy of the
8 pages (2000 words) Essay
Legitimacy Theory In Brewing And Hotels Sector
There has been a discussion of legitimacy and especially in the context of the large body corporates in the globe. It is an issue that has been connected to the Corporate Social Responsibility issue and often the focus has had to do with the genuineness of its undertaking and the merits to the society at large.
8 pages (2000 words) Essay
Account theory
efforts by philosophers and theorists, one can see that individuals and businesses have not been able to fulfill the ethical requirements that often result in unethical practices, disasters, public controversies, scandals, etc (Crane, 2007, pp. 19-24). In other words, business
7 pages (1750 words) Essay
Case study
The paper then discusses the specific scenario of British Petroleum (BP) massive oil spill in April 2010 that occurred in the waters of the Mexican Gulf causing irreparable damage to the
6 pages (1500 words) Essay
Assess A.J. Simmons's theory of philosophical anarchism. Is it a successful analysis of obligation and legitimacy Why/why not What does the philosophical-anarchist critique tell us about obligation and state authority
This theory refers to certain set of philosophical perceptions on the nature of political society. Anarchists believe in the social and political life in which the state plays no important role. Some anarchist theories completely deny the legitimacy of the state while
7 pages (1750 words) Essay
Accounting Theory
Corporate social reporting in the UK began to take shape during 1970s when social Audit Limited was formed to conduct external audits to assess firm’s social effects. In early 1990s,
6 pages (1500 words) Essay
The main motivation for corporate [social and environmental] reporting ... is to enhance corporate image and credibility with stakeholders (Adams, 2002: 244-245). Do you agree Use a variety of accounting theories to respond to Adams (2002) state
In order to succeed, it is import for all business organizations to ensure that they are seen to be acting in a responsible manner towards planet, people and profit. The main perspective that is taken in this nation is that
6 pages (1500 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Contact Us