financial accounting theory （rmit university,craig deegan）--chapter8无管制财务报告决策-理论导向下的制度问题

Financial Accounting TheoryCraig Deegan,Chapter 8Unregulated financial reporting decisions: Considerations of systems oriented theories Slides written by Michaela Rankin,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.2,Learning Objectives,In this chapter you will be introduced to how community or stakeholders perceptions can influence the disclosure policies of an organisationhow Legitimacy Theory and Stakeholder Theory can be applied to help explain why an entity might elect to make particular voluntary disclosures,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.3,Learning Objectives,organisational legitimacy and how corporate disclosures within such places as annual reports can be used as a strategy to maintain or restore the legitimacy of an organisationhow the respective power and information demands of particular stakeholder groups can influence corporate disclosure policiesthe view that a successful organisation is one that is able to balance or manage the demands, including information demands, of different stakeholder groups,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.4,Systems-oriented theories,Legitimacy and Stakeholder theories are both systems-based theoriesfocus on the role of information and disclosure in the relationships between organisations, the State, individuals and groupsthe entity is influenced by, and influences the society in which it operates,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.5,Political Economy Theory,Legitimacy Theory and Stakeholder Theory derived from Political Economy theorypolitical economy is the social, political and economic framework within which human life takes placeeconomic issues cannot be investigated in the absence of considering the political, social and institutional framework within which economic activity takes place,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.6,Political Economy Theory continued,Corporate reports not considered neutral and unbiased, but are a product of the interchange between the corporation and its environmentTwo streams of Political Economy theory:classicalbourgeois,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.7,Classical Political Economy Theory,Related to the works of Marxconsiders class interests, structural conflict, inequity and the role of the stateaccounting reports and disclosures are a means of maintaining the favoured position of those who control scarce resourcesfocuses on the structural conflicts within society,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.8,Bourgeois Political Economy Theory,Does not explicitly consider structural conflicts and class strugglesconcerned with interactions between groups in an essentially pluralistic worldLegitimacy Theory and Stakeholder Theory derive from this branch does not question or study the various class structures within society,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.9,Legitimacy Theory,Organisations seek to ensure they operate within the bounds and norms of their respective societiesactivities are perceived to be legitimatebounds and norms not static so require organisation to be responsiverelies upon the notion of a social contract,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.10,Legitimacy versus legitimation,Legitimacy is the status or condition which exists when an entitys value system is congruent with that of societylegitimation is the process which leads to an organisation being viewed as legitimate,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.11,Social contract,Represents the implicit and explicit expectations that society has about how the organisation should conduct its operationstraditionally the optimal measure of performance was profit maximisationpublic expectations have changed so organisations are now required to address human, environmental and other social issues,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.12,Implications of not meeting social contract,Society allows the organisation to continue operations to the extent that it meets their expectationsthe organisation may find it difficult to obtain the necessary support and resources to continue operationsmay lead to sanctions such as legal restrictions on operations, limited resources provided, or reduced demand for products,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.13,Actions to legitimate activities,Adapt output, goals and methods of operation to conform to definitions of legitimacyattempt, through communication, to alter the definition of social legitimacy so it conforms with the organisations present practices, output and valuesattempt, through communication, to become identified with symbols or values which imply legitimacy,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.14,Communication to maintain legitimacy,Seek to educate and inform the community about changes in performance and activitiesseek to change perceptions but not behaviourseek to manipulate perception by deflecting attention from the issue to other related issuesseek to change external expectations,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.15,Role of public disclosure,Public disclosure in such places as annual reports can be used to implement each of the previous strategiesperspective adopted by many researchers of social responsibility reportinghighlights the strategic nature of financial statements and other related disclosures,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.16,Empirical tests of Legitimacy Theory,Used by numerous researchers examining social and environmental reporting practicesused to attempt to explain disclosuresdisclosures form part of the portfolio of strategies undertaken to bring legitimacy to or maintain legitimacy of the organisation,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.17,Examples of empirical studies,Patten (1992)examined the change in the extent of environmental disclosures of US oil firms around the Exxon Valdez oil spill in Alaskalegitimacy theory suggested that they would increase disclosure in the annual report after the spillfound the increase in disclosure occurred across the industry,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.18,Examples of empirical studiescontinued,Deegan and Rankin (1996)used Legitimacy Theory to explain changes in annual report environmental disclosure policies around proven environmental prosecutionsprosecuted firms disclosed significantly more environmental information in the year of prosecution than any other yearprosecuted firms disclosed more information than non-prosecuted firms,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.19,Examples of empirical studiescontinued,Deegan and Gordon (1996)investigated the objectivity of environmental disclosure practices and trends over time, as well as whether environmental disclosures related to environmental group concernsfound increased disclosure over time associated with increased environmental group membershipdisclosures mostly positivepositive relation between environmental sensitivity of industry and disclosure,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.20,Examples of empirical studiescontinued,Gray, Kouhy and Lavers (1995)performed longitudinal study of UK social and environmental disclosures from 1979-1991related trends to Legitimacy Theory, with specific reference to Lindbloms strategies,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.21,Examples of empirical studiescontinued,Deegan, Rankin and Voght (2000)used Legitimacy Theory to explain how social disclosures in annual reports changed around the time of major social incidents or disastersCarpenter and Feroz (1992)a US study on the choice of an accounting frameworkrelated to a desire to increase the legitimacy of an organisation,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.22,How management determines societys expectations,Legitimacy Theory proposes a relationship between corporate disclosure and community expectationsmanagement has been found to rely on the media, with the media being observed to shape community expectations (ODonovan 1999),Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.23,Legitimacy Theory versus Positive Accounting Theory,Legitimacy Theory has been compared to the Political Cost Hypothesis of PATLegitimacy Theory relies on the notion of a social contractit does not rely on the economics-based assumption that all action is driven by self-interest and wealth maximisation or make assumptions about the efficiency of markets,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.24,Stakeholder Theory,Two branches of Stakeholder Theory:ethical (moral) or normative branchpositive (managerial) branchmany similarities between Legitimacy Theory and Stakeholder Theoryshould not be treated as two separate theories but two (overlapping) perspectives of the issue set within a political economy framework,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.25,Ethical branch of Stakeholder Theory,All stakeholders have the right to be treated fairly by an organisationissues of stakeholder power are not directly relevantmanagement should manage the organisation for the benefit of all stakeholders,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.26,Ethical branch of Stakeholder Theorycontinued,firm is a vehicle for coordinating stakeholder interestsmanagement have a fiduciary relationship to all stakeholderswhere interests conflict, business managed to attain optimal balance among themeach group merits consideration in its own rightalso have a right to be provided with information, even if not used,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.27,Definition of stakeholders,Any identifiable group or individual who can affect the achievement of an organisations objectives, or is affected by the achievement of an organisations objectives (Freeman and Reed 1983),Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.28,Primary versus secondary stakeholders,Primary stakeholders:one without whose continuing participation the corporation cannot survive as a going concern Secondary stakeholders:those who influence or affect, or are influenced or affected by, the corporation, but they are not engaged in transactions with the corporation and are not essential for its survivalethical branch does not differentiate between primary and secondary stakeholders,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.29,Right to information accountability,In considering rights to information accountability is considered:the duty to provide an account or reckoning of those actions for which one is held responsibleaccountability involves two responsibilities:to undertake certain actionsto provide an account of those actionsreporting is assumed to be a responsibility rather than demand driven,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.30,Testing of ethical branch of theory,As involves normative perspectives about how the organisation should act ,they cannot be validated by empirical observationnormative theory attempts to interpret the function of, or provide guidance about, the corporation,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.31,Managerial branch of Stakeholder Theory,Attempts to explain when corporate management will be likely to attend to the expectations of particular (powerful) stakeholdersmore organisation-centredstakeholders identified by the organisationextent to which organisation believes relationship needs to be managed in interests of the organisation,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.32,Managerial branchcontinued,Theories can be tested with empirical observationunlike normative ethical branchspecifically considers the different stakeholder groups within society, and how they should best be managednot society as a whole like Legitimacy Theoryexpectations of stakeholders considered to impact on operating and disclosure policies,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.33,Stakeholder power,Organisation will not respond to all stakeholders equally, but to the most powerfulstakeholder power is a function of the stakeholders degree of control over resources required by the organisationeg. labour, finance, influential media, ability to legislate, ability to influence consumption of the organisations goods and services,Copyright 2000 McGraw-Hill Book Co. Aust. PPT t/a Financial Accounting Theory by Deegan,8.34,Stakeholder powercontinued,Major role of management is to assess the importance of