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Material legitimacy: Blending organisational and stakeholder concerns through non-financial information disclosures

John Dumay (Department of Accounting & Corporate Governance, Faculty of Business & Economics, Macquarie University, Ryde, Australia)
Geoff Frost (Discipline of Accounting Department, The University of Sydney, Sydney, Australia)
Cornelia Beck (Discipline of Accounting Department, The University of Sydney, Sydney, Australia)

Journal of Accounting & Organizational Change

ISSN: 1832-5912

Article publication date: 2 March 2015

Abstract

Purpose

The purpose of this paper is to present a case study of how two organisations deal with disclosing non-financial information (NI). This is of interest because the reporting of NI by companies to disclose environmental, social and governance issues to their stakeholders and society is continuing to grow.

Design/methodology/approach

To investigate, the authors examine the manner in which two of Australia’s largest companies approach disclosing NI from a legitimacy perspective utilising Suchman’s (1995) “institutional and strategic legitimacy” perspectives to explore the choices made by the companies when disclosing NI.

Findings

The paper presents a model of legitimacy influenced disclosure based on “material legitimacy”, which we define as the form of legitimacy that enables organisations to blend what is important to the organisation (strategic legitimacy) with the primary concerns of its major stakeholders (institutional legitimacy). In this sense, the model outlines how companies try to achieve mutually beneficial “win–win” outcomes for themselves and their stakeholders. However, the difficulty is in judging what issues become “material” and whether they should be disclosed.

Originality/value

The paper is novel because it presents a model of legitimacy-influenced disclosure based on “material legitimacy” and transparency to explain what and how NI is disclosed.

Keywords

Acknowledgements

Funding from CPA Australia is acknowledged. The authors thank all interviewees for their participation in this project. Thanks also to Fiona Crawford of the Editorial Collective for her sterling editorial efforts.

Citation

Dumay, J., Frost, G. and Beck, C. (2015), "Material legitimacy: Blending organisational and stakeholder concerns through non-financial information disclosures", Journal of Accounting & Organizational Change, Vol. 11 No. 1, pp. 2-23. https://doi.org/10.1108/JAOC-06-2013-0057

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited