Current theories on the origin of the nonprofit sector do not adequately explain changes in the relative scale of social welfare service provision by the state versus private nonprofit entities. French and Japanese experiences illustrate that nations can undergo significant change, cycling through periods of expansion then restriction of the legal status and role of the nonprofit sector. This article considers the potential for legitimation strategies to explain the shifts in nonprofit status in France and Japan. The article concludes that although some theoretical foundation exists on legitimation concepts, additional work needs to be done to derive a sufficient theory of how legitimation issues affect change in the nonprofit sector.

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Contemporary accounting conceptual frameworks depict reporting entities as self-evident stand-alone units whose current activities are likely to continue. That representation is revisited in light of Veblen's (1904) sabotage thesis that managers routinely utilize mechanisms that disrupt underlying markets. Credit default swaps played a significant role in the 2008 subprime financial crisis, blurring the boundaries of entities to create entanglements that threatened the global financial infrastructure. The reporting entity and going concern concepts developed in a climate of philosophical pragmatism operating from a flawed premise that a scientific approach assures objective, value-free data. The conventional treatment of reporting entities is contrasted with emerging conversations that paint “the firm” as a legal fiction functioning within a dynamic and potentially unstable matrix. The paper argues that a distorted view on the underlying nature of the firm masks significant public interest issues, making it difficult to address problems inherent in interdependent institutional structures.