Accounting Theory- Stakeholders - 1220 Words

Question: Taking into account Figure 3.4 on page 45 of your textbook (Stakeholder Typology: One, Two, or Three Attributes Present) discuss the ‘Ethics in Practice case’ on page 46 (Are Plants and Flowers Stakeholders? Do they have rights?) Freeman (1984, P. 46) popularized the definition of a stakeholder as ‘. . . ANY group or individual who can affect or is affected by the achievement of the organization’s objectives’. This is a very broad definition meaning that in today’s global business environment any individuals and groups may be business’s stakeholders (Davey, 2015). This sparks the debate about whether or not the natural environment can be identifiable as a stakeholder. In the ethics in practice case ‘Are Plants and Flowers†¦show more content†¦Legitimacy- This perceives appropriateness or a shareholder’s claim to a stake. Stakeholder legitimacy is defined as a ‘desirable social good’, and legitimate stakeholders are those that ‘really count’ (Mitchell et al., 1997). Stakeholders with an obvious, formal and direct relationship to the company such as owners, customers, and employees have a high degree of legitimacy. Authors excluding the natural environment from being a stakeholder say the natural environment does not have a degree of legitimacy because of it lack of human characteristics and a lack of perceived obligation between it and organizations (Phillips and Reichart, 2000). However Haigh and Griffiths (2009) argue that the natural environment is a legitimate stakeholder because managers address environmental issues to maintain their ‘right to operate’. Urgency- Urgency is the degree to which an issue requires immediate action (Mitchell et al., 1997). Extreme weather, as a result of climate change fits this description because it can have devastating impacts. For example, major environmental disasters (e.g. storms and tsunamis) demand urgency and power as they often result in life threatening situations. This results in legitimacy as they require immediate reaction due to the nature of destruction and the effects on the economic, physical and social environment (Davey, 2015). Power- Power is the ability to influence others toShow MoreRelatedTess666 Words   |  3 PagesUtility of Stakeholder Theory for Sustainable Business Introduction Strategies employed by international companies to gain competitive advantage over their rivals differ from one company to another. One way of doing this is ensuring that they are environmentally conscious in how they partake their activities. In this modern age, they should not only focus on profit making but also consider how their activities affect the stakeholders of the business; hence the stakeholder model. The Stakeholder ModelRead MoreCorporate Governance : Good Business Management1658 Words   |  7 Pagesefficient, effective, honest, transparent and democratic. A company with high quality management will have access to financing (public or private) in better conditions and terms. This implies appropriate business decisions to reach a higher level of accounting transparency, more efficiently managing business problems, and giving people, who are not involved in decision making, the guarantee that their interests are well protected (Monks 2011, p.10). But the most important, perhaps, is that a good implementationRead MoreStakeholder Theory Of The Firm1423 Words   |  6 PagesEven though the stakeholder theory of the firm served as a comprehensive fundamentally solid concept for corporate social responsibility to branch out of; without the stakeholder theory of the firm there is no corporate social responsibility and vice versa, because business cannot exist without society and soci ety is not sustainable without business, due to advancements in the modern world, business and society have evolved, and traditional business theories have a narrow business scope, while contemporaryRead MoreStakeholders Theory5106 Words   |  21 PagesThe stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization.[1] It was originally detailed by R. Edward Freeman in the book Strategic Management: A Stakeholder Approach, and identifies and models the groups which are stakeholders of a corporation, and both describes and recommends methods by which management can give due regard to the interests of those groups. In short, it attempts to address the Principle of WhoRead MoreManagerial Stakeholder Theory - Essay2991 Words   |  12 PagesManagerial Stakeholder Theory To predict real-life phenomena we need theories. Similarly, stakeholder theory is a theory which is used to explain the phenomena of motivation for corporate social disclosures. This research work is based on the concept of stakeholder theory and its practical applications in predicting the phenomena of corporate social disclosures (van der Laan 2009). Further there will be explanation of Managerial stakeholder theory. The concept of stakeholder theory has got popularityRead MoreEssay on Financial Accounting Theory1727 Words   |  7 Pagesï » ¿QUESTION 1 a. Outline the objective and the principles of a theory that prescribes fair value accounting. Fair value accounting is to measure selected assets at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The objective of fair value accounting is linked with the objective of ‘decision usefulness’ of general purpose financial reporting. That is, to provide relevant information thatRead MoreEthical Concerns in Corporate Finance: A Closer Look at Earnings Management1640 Words   |  7 Pagesconcern in the corporate world. With the flexible accounting standards under the Generally Accepted Accounting Principles (GAAP) and International Accounting Standards (IAS), there are many grey areas of what is, and is not, ethical. Earnings management falls in this grey area. Earnings management is the term used to describe the process of manipulating earnings of the firm to achieve a target predetermined by management. The flexibility of accounting standards may cause some variability in earningsRead MoreBusiness Law and Ethics Case Study1141 Words   |  5 PagesPart A Utilitarianism Upon applying utilitarianism theory to Tom’s current situation, Tom would maximise the greatest good and increase the happiness of more people and parties by exaggerating his work experience. The first party that would benefit from this is his parents. As was said in the case study (2014), Tom’s mother had lost her job a few years ago and has remained unemployed since. Tom’s father has also not been doing well financially, as his business has not been doing well as of latelyRead MoreThe Theory Provided By Magarey1617 Words   |  7 PagesThe theory provided by Magarey (2012) indicates that there are several elements in this article associated with this research question: a. The revolution is that integrated reporting provides assistance for the company to prepare the financial and non-financial reporting together for the stakeholders, which makes the company to consider the long term goal of the company (i.e., Hillman Keim 2001). b. The IR enhances the involvement of stakeholders, it creates the most effective and transparentRead MoreAdvanced Accounting Theory Project Essay1596 Words   |  7 Pagesï » ¿Do corporate social responsibility (CSR) reports provide shareholders and stakeholders with useful information on corporate social and environmental performance or are they merely a public relations vehicle? Answer this question by reference to a variety of accounting theories. There are many definitions to Corporate Social responsibility(CSR). One most common definition is that CSR is the consideration and response of the firm to issues that are beyond the regular technical, legal, and environmental