1 3101AFE Accounting Theory and Practice WORKSHOP 3 Deegan Topics 8 and 9: Accounting for corporate social responsibilities QUESTION 1: What does the notion of legitimacy and social contract have to...

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1. Corporate disclosure policy refers that every company is required to disclose some of their vital information to the public including the ownership structure, composition of the board, annual accounts, etc. (Huafang & Jianguo, 2007). As per the legitimacy theory, the company has to act within the boundary of the society it is operating in. Legitimacy theory establishes the relation between the expectations of the community with the corporate disclosure made by a business. Social contract refers to the expectation of the society from a business, which states that the business should not only concentrate on profit maximization but it also has to work towards the issues of the society including that of human and environment and the work done need to...