Accounting assignment

2CSR Voluntary Disclosures


Prepared by (Student’s Name)

Assurance of CSR Reports In Relation to Stakeholder & Legitimacy Theory

Stakeholder Theory

According to Kolk and Pinske (2006, p.60), the stakeholder theory proposes that stakeholders are persons that are able to affect or rather are affected by specific achievements of a company’s overall objective. In essence, stakeholder theory emphasizes on the fact that most of the firms have an extensive and incorporated different forms of stakeholders for which they have a direct commitment and responsibility. This theory suggests that all stakeholders and not only shareholders share equal privileges (Wang & Juslin, 2013). It is important to note that the stakeholder theory stipulates the need for balancing the claims of shareholders with those of other stakeholders; and through this balancing postulation, firms can easily attract and sustain support of their stakeholders (Sweeney & Coughlan, 2008). In the recent years; distinctive stakeholder attributes have continued to increase intensive attention that is needed for assisting management team in coming up with different ways of allocating aspects related to time; energy and other scarce resources to the existing number of stakeholders. In fact, in the event that stakeholder theory is utilised as a unique managerial tool; it is particularly set to identify which of the stakeholders are deemed to be more important and, due to that should receive a substantial level of management attention. This is attributed to the fact that different stakeholders posit different and mostly conflicting needs and interests (Sweeney & Coughlan, 2008). Presentation of annual and CSR depicts that CSR is defined and illustrated by the need to uphold their responsibility to the numerous stakeholders. Thus, this revelation ascertains that the stakeholder theory is used to expound on activities related to corporate social responsibility. Markedly, Wang & Juslin, (2013, p.133) notes that CSR activities have continued to be communicated as being responsibilities as well as policies in regards to the main stakeholder groups like customers, employees; suppliers; environmental agencies and the overall surrounding communities at large.

Legitimacy Theory

Legitimacy of organisations indicates the exact level of cultural support for different activities within entities. It also explains the imminent extent for which a given degree of established cultural accounts avails rationale for their existence; functioning and jurisdiction. Legitimacy is set to impact operations in a given number of ways; as prior research indicates that positive legitimacy views contribute to investor appeal (Panwar, Paul, Nybakk, Hansen, & Thompson, 2014). These high levels of legitimacy further helps to cushion against possible unsystematic variations in aspects related to stock prices while still providing entities with reservoir of support. Nowadays, management team use corporate social responsibility reports to attain a certain degree of legitimacy since CSR-related actions can possibly develop enormous reputational capital and may continue to assist them formulate and align with distinctive socio-cultural norms of their numerous institutional environments.

B. How Country-Level Institutional Factors Influence the Voluntary Assurance of CSR Reports

It is noted that the capacity of a firm to subscribe to the assurance is fostered by their overall goals to improve stakeholder confidence levels in the underlying quality of the sustainability of information availed and commitment to sustainability notions. Certainly, Kolk and Perego (2010, 184) ascertain that the demand for CSR assurance is vehemently influenced by the legal environment for which an organisation conducts its operations. Of particular interest to note, attributes related to governance mechanisms, country-level institutional frameworks and the degree of awareness on sustainability challenges are indeed elements that play a significant role in the adoption of assurance capabilities. It is crucial to note that jurisdiction attribute, which explains the country-level institutional factors affecting CSR assurance, is defined as an influence or power for which a country possess in order to conduct legal decisions and enforce laws to influence on organisation communication abilities. These jurisdiction traits have been known to have the capability to alter the underlying pattern of disclosures patterns. On the national level, these factors could include; the nature of corporate governance mechanism; type of business systems; form of legal systems and degree of enforcement as well as the degree of economic development.

Research indicates that there are three forms of business systems; Anglo-Saxon; Communitarian; and Emerging Market systems. Considering this categorical distinction, Van der Laan Smith, Adhikari and Tondkar (2005, p.143) posits that organisations from countries with a rather stringer emphasis on social issues and for which much emphasis on multi stakeholder is placed; will certainly enjoy a higher degree and quality of social disclosure in comparison to those in countries with weaker stipulations on these issues and thus, overseen by shareholders. For instance, the Anglo-Saxon business system is attributed to expectations of high level of information disclosure while the Communitarian and emerging business will likely provide restricted amount of information disclosure and a subsequent lack of lower legitimacy tenets.

References List

Kolk, A. & Pinkse, J. 2006. Stakeholder mismanagement and Corporate Social Responsibility crises. European Management Journal 24, 1, pp. 59–72.

Kolk, A & Perego, P 2010, ‘Determinants of the adoption of sustainability assurance statements: An international investigation’, Business Strategy & the Environment, 19, 3, pp.182-198.

Panwar, R, Paul, K, Nybakk, E, Hansen, E, & Thompson, D 2014, ‘The Legitimacy of CSR Actions of Publicly Traded Companies Versus Family-Owned Companies’, Journal Of Business Ethics, 125, 3, pp. 481-496

Sweeney, L, & Coughlan, J 2008, ‘Do different industries report Corporate Social Responsibility differently? An investigation through the lens of stakeholder theory’, Journal of Marketing Communications, 14, 2, pp. 113-124

Van der Laan Smith, J, Adhikari, A & Tondkar, RH 2005, ‘Exploring differences in social disclosure internationally: A stakeholder perspective’, Journal of Accounting &
Public Policy, 24, 2, pp.123-151

Wang, L, & Juslin, H 2013, ‘Corporate Social Responsibility in the Chinese Forest Industry: Understanding Multiple Stakeholder Perceptions’, Corporate Social Responsibility & Environmental Management, 20, 3, pp. 129-145