eCite Digital Repository (University of Tasmania) · 2001 · 182 citations · 0 references
BusinessAccountingCorporate DisclosureCorporate ReportingCorporate Social ResponsibilityCorporate Responsibility ReportingCorporate Social Responsibility ReportingCorporate Sustainability DisclosureDisclosureEnvironmental ReportingSustainability ReportingEnvironmental Disclosure ReportingLegitimacy Threats
Legitimacy theory, which holds that firms must act within society’s socially acceptable norms to survive, has been widely cited to explain the rise in environmental disclosures since the early 1980s. This study extends legitimacy theory’s applicability and predictive power by examining how annual‑report environmental disclosures relate to efforts to gain, maintain, or repair legitimacy and to the selection of specific legitimation tactics. Using a quasi‑experimental design, the authors conducted semi‑structured interviews with senior executives from three large Australian public companies. The results confirm legitimacy theory as an explanatory factor for environmental disclosures and reveal that the likelihood of employing particular micro‑legitimation tactics depends on the legitimacy‑threatening event and the intended purpose—gain, maintain, or repair.
Much of the extant research into why companies disclose environmental information in the annual report indicates that legitimacy theory is one of the more probable explanations for the increase in environmental disclosures since the early 1980s. Legitimacy theory is based on the idea that in order to continue operating successfully, corporations must act within the bounds of what society identifies as socially acceptable behaviour. The purpose of the practical research undertaken and reported in this paper is to extend the applicability and predictive power of legitimacy theory by investigating to what extent annual report disclosures are interrelated to: attempts to gain, maintain and repair legitimacy; and the choice of specific legitimation tactics. The quasi‐experimental method adopted utilised semi‐structured interviews with senior personnel from three large Australian public companies. The findings indicated support for legitimacy theory as an explanatory factor for environmental disclosures. Moreover, findings about the likelihood of specific micro‐legitimation tactics being used in response to legitimacy threatening environmental issues/events, and dependent on whether the purpose of the response is designed to gain, maintain or repair legitimacy, are reported.