Corporate Social Reporting: A Rebuttal of Legitimacy Theory

Guthrie, James; Parker, Lee D.

doi:10.1080/00014788.1989.9728863

Cited by 1,066 publications

(922 citation statements)

References 12 publications

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“…Our findings indicated support for organizational legitimacy theory as an explanatory factor for Drummond's misleading messages (Cho and Patten, 2007;Deegan, 2014;O'Donovan, 2002). Furthermore, they are consistent with previous studies in the sense that SER is ultimately considered an effective driver for systematic disclosure of positive information without full disclosure of negative information (Bansal & Clelland, 2004;Guthrie & Parker, 1989).…”

Section: Discussionsupporting

confidence: 91%

“…In their efforts to gain legitimacy, some companies have chosen to account for their sustainability performance through frequent SRs (Guthrie & Parker, 1989). Those reports are supposed to represent a way of communication to the main companies' stakeholders in order to get them involved in a common agenda of collective welfare (Berrone, Fosfuri, & Gelabert, 2015).…”

Section: Fuzzy Reporting (Fr)mentioning

confidence: 99%

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Fuzzy reporting as a way for a company to greenwash: perspectives from the Colombian reality

Contreras-Pacheco

Claasen

2017

Problems and Perspectives in Management

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Drawing on the legitimacy theory framework, this study introduces an alternative means to spot “fuzzy reporting” signals as a way to detect greenwashing at the firm level. Its approach is based on the way the sustainability reporting process can mislead stakeholders after critical incidents take place. In order to do so, a single environmental incident, which took place in Colombia, is analyzed in light of what happened before, during and afterwards, with special emphasis on the corporate disclosure process performed by the company involved. Results obtained give support to the assumption that fuzzy reporting can be objectively detected not only through the analysis of annual sustainability reports, but also by tracking other forms of corporate messages when a specific concern is carefully followed. This study’s contribution is two-fold. First, it builds on the theoretical notions of greenwashing and fuzzy reporting by illustrating a practical and objective way to identify some deceiving corporate practices. Second, it empirically evaluates this approach in a sensitive context in order to obtain better illustration and prepare the groundwork for further studies.

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Section: Discussionsupporting

confidence: 91%

Section: Fuzzy Reporting (Fr)mentioning

confidence: 99%

Fuzzy reporting as a way for a company to greenwash: perspectives from the Colombian reality

Contreras-Pacheco

Claasen

2017

Problems and Perspectives in Management

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“…Legitimacy is usually associated with highly contested topics such as social and environmental disclosure (Deegan & Gordon, 1996;Guthrie & Parker, 1989;Patten, 1992;Tilt, 1994;Wilmshurst & Frost, 2000) and derivatives (Chalmers & Godfrey, 2004). However, firms are also sensitive to stakeholder criticism of remuneration-related issues (e.g., Murphy, 1996).…”

Section: Voluntary Disclosure and The Demand For Informationmentioning

confidence: 99%

Directors' remuneration: A comparison of Italian and UK non-financial listed firms' disclosure

Melis

Gaia

Carta

2015

The British Accounting Review

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Abstract:Directors' remuneration is a key issue for both academics and policymakers. It has caused enormous controversy in recent years. This study uses a comprehensive index to analyse the disclosure of directors' remuneration in Italian and UK listed firms. It finds that the level of voluntary disclosure is significantly associated with firm-specific incentives, such as the demand for information from investors and the need for legitimacy. It finds that the level of voluntary disclosure is significantly higher in the UK than in Italy and that firm-specific incentives to disclose voluntary information differ according to the institutional setting in which a firm operates. In the UK, firm-specific incentives mostly come from the demand for information, estimated with the level of ownership diffusion, and the need for legitimacy generated by poor market performance and shareholders' dissent. In Italy, firm-specific incentives seem to be represented by the need for legitimacy generated by media coverage. This study also provides evidence that, in both countries, the information disclosed in corporate documents does not allow readers to obtain a comprehensive picture of directors' remuneration. Bonuses are poorly disclosed even though they are a key element of directors' remuneration. This finding is clearly important for policymakers at European and national level.Keywords: agency theory, directors' remuneration, disclosure, legitimacy theory. 2 IntroductionDirectors' remuneration aims to align the interests of directors with those of shareholders, thereby reducing agency problems (Jensen & Meckling, 1l976). However, directors' remuneration, of itself, could give rise to agency problems (Bebchuk et al., 2002). This is one of the key areas where directors may have a conflict of interest and where due account should be taken of the interests of shareholders (EU Commission, 2004). Controversy surrounding directors' remuneration reflects the perception that payments have been excessive and that the lack of timely and adequate disclosure has resulted in increased information asymmetry and rent-extraction (Bebchuk et al., 2002, Jensen et al., 2004. The demand for public disclosure arises from information asymmetry and agency conflicts between directors and outside investors (Healy & Palepu, 2001). Disclosure on directors' remuneration would help to resolve such problems. It can reduce information asymmetry on complex remuneration arrangements that can be an important mechanism to transfer wealth from shareholders to directors (Bebchuk et al., 2002;Laksmana, 2008; Nelson et al., 2010). Moreover, directors' remuneration has been blamed for playing a central role in many international corporate scandals, as well as having been a key factor that contributed to the global financial crisis (e.g., Bebchuk & Fried, 2005). Consequently, regulators have been concerned that directors should be accountable to shareholders by disclosing their remuneration policies. In particular, the EU Commission (2004;) has issued two non-binding ...

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“…Most of the qualitative papers show that socially responsible conduct gives rise to positive reputational outcomes that contribute to increasing performance ( .From these studies it emerges that banks operate within a social environment.The fact that banks are sensitive to the social environment in which they exist leads to increased reputation, and sensitivity to the social environment takes place in the form of supporting activities that benefit the public and are sensitive to the physical environment.Reputation that has emerged in this way contributes greatly to the intangible assets of the business (Okur & Arslan, 2014).With regard to other qualitative papers, three studies explicitly rely on relations between CSR reporting and reputation.According to legitimacy theory, CSR reporting is aimed at providing information that legitimizes a company's behavior by intending to influence stakeholders' and eventually society's perceptions about the company in such a way that the company is regarded as a "good corporate citizen" and its actions justify its continued existence (Guthrie & Parker, 1989).Among these studies, Arshad et al (2012) examine the effect of Islamic CSR disclosure and corporate reputation as well as performance.The authors argue that CSR activities communicated in corporate annual reports are significantly positively related to corporate reputation as well as firm performance, while Bartlett (2005) demonstrates that adoption of CSR reporting is linked to higher reputation indices in a sample of Australian banks.The literature review presented by Pérez (2015) demonstrates that CSR reporting and corporate reputation are positively correlated.These results highlight that banks are proactively implementing and disclosing CSR activities that meet and strengthen the needs of multiple stakeholders.Other qualitative studies confirm a positive relationship between CSR and reputation in the banking industry (Xifra & Ordeix, 2009). In addition, Xifra and Ordeix (2009) illustrate Banco Santander's management of reputation and propose the bank as a paradigmatic case for the importance of dialogue and reputation during a crisis.Finally, in contrast to the methods and results described so far, I have found works that show conflicting opinions with respect to the results of the field under study.These studies reveal that the motivations behind CSR programs remain driven by profit-led strategies, defining the relationship between CSR and reputation as a paradox and a moral trap (Bowman, 2013;McDonald, 2015;Vogler & Gisler, 2016).…”

Section: -Qualitative Research Methodologiesmentioning

confidence: 99%

The Relation between Corporate Social Responsibility and Bank Reputation: A Review and Roadmap

Lorena¹

2018

Eur. j. econ. bus. stud.

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Over the past decades, scholars have paid greater attention to relation between Corporate Social Responsibility (CSR) and corporate reputation. However, despite a growing interest in this area, such linkages have remained relatively unexplored in the banking industry and the precise relationship is not clear. Moving from these considerations, this study proposes a systematic review of peer-reviewed scientific literature aiming to: 1) list, 2) classify and 3) compare existing studies. The review was carried out using the following databases: ISI Web, Google Scholar, and SSRN. I investigate a number of publishing academic works, summarizing main approaches, results and insights. I also provide a roadmap for future study and offer research questions about critical areas of this stream of research. The paper contributes to the ongoing international debates, and the preliminary results are encouraging.

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Corporate Social Reporting: A Rebuttal of Legitimacy Theory

Cited by 1,066 publications

References 12 publications

Fuzzy reporting as a way for a company to greenwash: perspectives from the Colombian reality

Fuzzy reporting as a way for a company to greenwash: perspectives from the Colombian reality

Directors' remuneration: A comparison of Italian and UK non-financial listed firms' disclosure

The Relation between Corporate Social Responsibility and Bank Reputation: A Review and Roadmap

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