Legitimacy Theory and Environmental Accounting Reporting and Practice: A Review

Abstract

In meeting the regulatory and ethical requirements of environmental accounting, reporting and practice among corporate organizations seem quite complex and challenging. Globally, management exerts much energy complying with environmental issues that affect salient societal requirements of pragmatic legitimacy and environmental accounting reporting and practice, yet the extent of this alignment remains uncertain. This study examined legitimacy theory and environmental accounting reporting and practices, adopting an exploratory research approach. The study resorted to using relevant materials from the field of accounting and finance. The study consulted and used journals, periodicals, and other documented material found to be appropriate and relevant to the study. Legitimacy theory was appropriately reviewed while other subsidiary theories of stakeholder theory and environmental information disclosure theory form part of the theoretical consideration. The study recommended that management of pollution sensitive companies should make environmental protection a priority and show good and quality character of adequate environmental disclosure and proper environmental accounting reporting and practice as expected by the stakeholders.

Research on the impact of green mergers and acquisitions of heavily polluting enterprises on the quality of environmental information disclosure: empirical evidence from listed companies in China

“…According to the legitimacy theory, only when an organization's behavior meets the expectations of society and can be accepted by stakeholders can it obtain legitimacy, so as to help the enterprise enjoy a good reputation among the public and attract more investors to support the development of the enterprise (Yu, 2020). The main assumption of the legitimacy theory is that organizations achieve recognition of their goals by fulfilling social contracts, that is, enterprises accept the conditions put forward by the society, undertake social responsibilities to gain acceptance and better understanding, and realize the understanding between society and enterprises, essentially for the purposes of legitimacy, harmonious coexistence, and mutual benefit (Ogunode, 2022). The legitimacy theory can effectively explain the environmental practices of enterprises (Mousa & Hassan, 2015), organize the implementation of green mergers and acquisitions, help enterprises establish green culture, enhance sustainable development ability, improve the quality of environmental information disclosure, achieve harmony with the environment, and obtain legitimacy with the help of environmental protection awareness and technical support.…”

Firm Characteristics and Corporate Social Responsibility of Listed Consumer Goods Sector Firms in Nigeria

“…This is a significant departure from the long-held belief that an organization's ability to make money is a reliable measure of its legitimacy (Muwazir, 2011). Ogunode (2022), postulated that the legitimacy theory has to do with a social contract between communities and corporate entities where the corporate entities carryout operation. The social contract is of great importance for the purpose of peaceful co-existence between them and for also mutual benefits to both parties.…”

The Effect of Profitability and the Board Directors on the Disclosure of Sustainability Report

“…Legitimacy theory is founded on the idea that companies operate in a community environment through a social contract [23] [24]. Based on this concept, the company will then agree to carry out various types of community-desired actions in exchange for receiving the company's goals, corporate survival, and other awards [25] [26]. The suitability of social value that the corporation wishes to produce can be achieved by improving community communication.…”