Stakeholder perspectives on a financial sector legitimation process

Niamh O'Sullivan (University of Amsterdam Business School, University of Amsterdam, Amsterdam, The Netherlands)
Brendan O'Dwyer (University of Amsterdam Business School, University of Amsterdam, Amsterdam, The Netherlands)

Accounting, Auditing & Accountability Journal

ISSN: 0951-3574

Publication date: 8 May 2009



The purpose of this paper is to present an in‐depth, context rich, and stakeholder‐focused perspective on the legitimation dynamics surrounding the initiation and evolution of one of the key financial sector environmental and social responsibility initiatives in recent years, the Equator Principles.


The paper draws on a combination of in‐depth interviews with non‐governmental organization (NGO) leaders, extensive documentary analysis and participant observation in order to understand and explain, from an NGO perspective, the use of the Equator Principles as a central element in an attempt to legitimise financial institutions' project finance activities. Key aspects of legitimacy theory are used to theoretically frame the analysis.


The paper reveals and analyses the process through which campaigning NGOs conferred a nominal level of legitimacy on financial institutions' project finance activities. It proceeds to unveil how and why this attained legitimacy unravelled. A perceived lack of accountability at an institutional, organisational and individual project level is identified as a central reason for this reduction in legitimacy.

Research limitations/implications

The paper primarily focuses on one side of the story of the dynamics of the legitimation process underpinning the evolution of the Equator Principles until 2006. Future research could focus on obtaining and theorising financial institution perspectives on the Equator Principles' development, implementation, and progression as well as analysing developments beyond 2006.


The paper advances our understanding of the dynamics of legitimation processes. These dynamics are studied from the perspective of a key “relevant public” thereby prioritising perceptions that are largely absent from corporate social accountability research seeking to empirically inform legitimacy theory.



O'Sullivan, N. and O'Dwyer, B. (2009), "Stakeholder perspectives on a financial sector legitimation process", Accounting, Auditing & Accountability Journal, Vol. 22 No. 4, pp. 553-587.

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