3101AFE Accounting Theory and Practice Homework Questions.
One file is the questions and I have also attached some extra information in pdf form that could be used to answer these questions.
Only one question has a specific limit of 200 - 500 words and the rest of the questions need to be answered appropriately.
T1_2021 3101AFE Accounting Theory Suggested Solutions to Workshop 3 Corporate Social Reporting (CSR) ___________________________________________________________________________ PART A: GENERAL QUESTIONS QUESTION 1: If an organisation’s management considered that the organisation might not have operated in accordance with community expectations (it broke the terms of the social contract), consistent with Legitimacy Theory, what actions would you expect management to undertake in the subsequent period? QUESTION 2: What is a ‘legitimacy gap’, and why could such a gap suddenly occur? QUESTION 3: Collison (2003, p. 861) states: Attention to the interests of shareholders above all other groups is implicit in much of what is taught to accounting and finance students. The very construction of a profit and loss account … is a continual, and usually unstated, reminder that the interests of only one group of stakeholders should be maximised. Indeed it may be very difficult for accounting and finance students to even conceive of another way in which affairs could be ordered … even at the algebraic level, let alone the moral. a) Do you agree or disagree with Collison, and why? b) If ‘profit’ maximisation is biased towards maximising the interests of only one stakeholder group, would you expect that over time there will be less emphasis on profits and more emphasis on other performance indicators? Why? What might be some of the alternative measures of performance? c) Would Collison’s comments provide a justification for moves towards profit measures that incorporate ‘full costs’ (that is, that consider the externalities of business)? QUESTION 4: Read Accounting Headline 9.8 and discuss how the HSBC will account for the job losses it creates. Do you think it is a limitation of financial accounting that the HSBC can show an increase in profits when such an increase is as a result of negatively impacting on a particular group of stakeholders? Explain your view. PART B: ANALYSIS QUESTIONS QUESTION 5 Word limit: Between 200 and 500 words. This word limit applies to this question as a whole and not to the individual components of the question. In the article by Clarkson et al. (2008), the authors draw on an alternative theory to legitimacy theory to explain the relationship between environmental performance and voluntary environmental disclosures. That is, they utilize, what they term economics-based theories to explain and predict why and how managers will choose to provide voluntary disclosures on the environmental activities of the firm. a) Summarise the main theoretical predictions of the economics-based theories indicated in the article, and compare these to the predictions of legitimacy and managerial stakeholder theory. b) Do you think that the explanations of economics-based theories and legitimacy theories are mutually exclusive? Explain your reasoning. 2 T 1 _202 1 1 3101AFE Accounting Theory Suggested Solutions to Workshop 3 Corporate Social Reporting (CSR) ___________________________________________________________________________ PART A: GENERAL QUESTIONS QUESTION 1: If an organisation’s management considered that the organisation might not have operated in accordance with community expectations (it broke the terms of the social contract), consistent with Legitimacy Theory, what actions would you expect management to undertake in the subsequent period? QUESTION 2: What is a ‘legitimacy gap’, and why could such a gap suddenly occur? QUESTION 3 : Collison (2003, p. 861) states: Attention to the interests of shareholders above all other groups is implicit in much of what is taught to accounting and finance students. The very construction of a profit and loss account … is a continual, and usually unstated, reminder that the interests of only one group of stakeholders should be maximised. Indeed it may be very difficult for accounting and finance students to even conceive of another way in which affairs could be ordered … even at the algebraic level, let alone the moral. a) Do you agree or disagree with Collison, and why? b) If ‘profit’ maximisation is biased towards maximising the in terests of only one stakeholder group, would you expect that over time there will be less emphasis on profits and more emphasis on other performance indicators? Why? What might be some of the alternative measures of performance? c) Would Collison’s commen ts provide a justification for moves towards profit measures that incorporate ‘full costs’ (that is, that consider the externalities of business)? QUESTION 4 : Read Accounting Headline 9.8 and discuss how the HSBC will account for the job losses it creates. Do you think it is a limitation of financial accounting that the HSBC can show an increase in profits when such an increase is as a result of negatively impacting on a particular group of stakeholders? Explain your view. T1_2021 1 3101AFE Accounting Theory Suggested Solutions to Workshop 3 Corporate Social Reporting (CSR) ___________________________________________________________________________ PART A: GENERAL QUESTIONS QUESTION 1: If an organisation’s management considered that the organisation might not have operated in accordance with community expectations (it broke the terms of the social contract), consistent with Legitimacy Theory, what actions would you expect management to undertake in the subsequent period? QUESTION 2: What is a ‘legitimacy gap’, and why could such a gap suddenly occur? QUESTION 3: Collison (2003, p. 861) states: Attention to the interests of shareholders above all other groups is implicit in much of what is taught to accounting and finance students. The very construction of a profit and loss account … is a continual, and usually unstated, reminder that the interests of only one group of stakeholders should be maximised. Indeed it may be very difficult for accounting and finance students to even conceive of another way in which affairs could be ordered … even at the algebraic level, let alone the moral. a) Do you agree or disagree with Collison, and why? b) If ‘profit’ maximisation is biased towards maximising the interests of only one stakeholder group, would you expect that over time there will be less emphasis on profits and more emphasis on other performance indicators? Why? What might be some of the alternative measures of performance? c) Would Collison’s comments provide a justification for moves towards profit measures that incorporate ‘full costs’ (that is, that consider the externalities of business)? QUESTION 4: Read Accounting Headline 9.8 and discuss how the HSBC will account for the job losses it creates. Do you think it is a limitation of financial accounting that the HSBC can show an increase in profits when such an increase is as a result of negatively impacting on a particular group of stakeholders? Explain your view. Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis Peter M. Clarkson a,b, Yue Li c, Gordon D. Richardson c,*, Florin P. Vasvari d a UQ Business School, The University of Queensland, Australia b Faculty of Business Administration, Simon Fraser University, Canada c Joseph Rotman School of Management, University of Toronto, 105 St. George Street, Toronto, Ontario, Canada M5S 3E6 d London Business School, University of London, London, United Kingdom Abstract Previous empirical evidence provides mixed results on the relationship between corporate environmental perfor- mance and the level of environmental disclosures. We revisit this relation by testing competing predictions from eco- nomics based and socio-political theories of voluntary disclosure using a more rigorous research design. In particular, we improve on the prior literature by focusing on purely discretionary environmental disclosures and by developing a content analysis index based on the Global Reporting Initiative sustainability reporting guidelines to assess the extent of discretionary disclosures in environmental and social responsibility reports. This index better cap- tures firm disclosures related to its commitment to protect the environment than the indices employed by prior studies. Using a sample of 191 firms from the five most polluting industries in the US, we find a positive association between environmental performance and the level of discretionary environmental disclosures. The result is consistent with the predictions of the economics disclosure theory but inconsistent with the negative association predicted by socio-political theories. Nevertheless, we show that socio-political theories explain patterns in the data (‘‘legitimization’’) that cannot be explained by economics disclosure theories. ! 2007 Elsevier Ltd. All rights reserved. Introduction An unresolved research issue in environmental accounting is the empirical association between the level (i.e., amount) of corporate environmental disclosures and corporate environmental perfor- mance (Al-Tuwaijri, Christensen, & Hughes, 0361-3682/$ - see front matter ! 2007 Elsevier Ltd. All rights reserved. doi:10.1016/j.aos.2007.05.003 * Corresponding author. Tel.: +1 416 946 8601. E-mail addresses: p.clarkson@business.uq.edu.au (P.M. Clarkson), yueli@rotman.utoronto.ca (Y. Li), gordon.richard- son@rotman.utoronto.ca (G.D. Richardson), fvasvari@london. edu (F.P. Vasvari). www.elsevier.com/locate/aos Available online at www.sciencedirect.com Accounting, Organizations and Society 33 (2008) 303–327