Accounting Theory
Genre: Accounting

Use Legitimacy theory as an explanatory theory of voluntary disclosures made by companies such as BP. In answering the question you may want to:
• Explain what the key features of Legitimacy theory are
• Use the theory to explain why BP chose to make the disclosures shown in the

About the Book

Accounting Theory


Today, efforts are being made worldwide to maintain environmental balance since industry is growing in a rampant fashion, and definitely affecting the environment in the course. Various environmental laws have been put in place in various countries all over the World but this form of environmental legislation where there are standards and non-compliance to these standards attracts penalties is a passé, and has not resulted in the desired effect, that is controlling such environment harmful activities. In most of the countries, these laws are difficult to implement because of lack of capacity and will to control the same. Along with environmental legislation,various other forms of environmental policing were also adopted like tradable permits, charges on emissions etc. They were market based approaches to tackling the environment degradation but they have also proved pretty much ineffective. These tools are also quite difficult to design,and then to implement them and their continuous monitoring requires quite an effort.

The failure of environmental legislation and other tools like permits and charges made way to voluntary disclosure of corporate social activities, environmental information and other schemes by corporations (Guthri & Parker 1989, pp. 343-352). Corporations publically disclose emissions, pollution caused by their activities and also various remedial schemes incorporated in their activities. With information revolution in the past few years, information disclosure has become very popular and has been effective in improving corporate performance in environmental area.

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