Lo 2+3 - 1: Legitimacy Theory: 1 Created by DR G. L. Ilott, Cquniversity Australia
Lo 2+3 - 1: Legitimacy Theory: 1 Created by DR G. L. Ilott, Cquniversity Australia
The firm can only seek legitimacy. It therefore needs ways of "being nice" to society.
Accounting disclosures represent one way of telling society how nice the firm is.
Therefore, expect managers to make disclosures that might influence society and
gain greater legitimacy.
Criticisms are important for challenging views and sharpening our own critical thinking
processes.
I have no doubt that Legitimacy Theory offers us interesting insights into the
motivations of accountants and managers who decide what voluntary disclosures to
make.
That Legitimacy Theory doesn't play well with positive theorising does not of itself
mean that it is a bad theory.
And almost anything we study about financial reporting has strong links with risk
management strategies.