Question 1

The difference between 'classical' and 'bourgeois' political economy theory is that:
A) 'Classical' political economy theory explicitly considers class conflict and the role of the state in its analysis, while 'bourgeois' political economy theory does not.
B) 'Bourgeois' political economy theory explicitly considers class conflict and the role of the state in its analysis, while 'classical' political economy theory does not.
C) 'Classical' political economy theory is a normative theory, whereas bourgeois' political economy theory is a positive theory.
D) 'Bourgeois' political economy theory is a normative theory, whereas 'classical' political economy theory is a positive theory.

Accepted Answer

Classical political economy theory, developed in the 18th and 19th centuries, was concerned with analyzing the economic system and understanding its functioning, including the role of class conflict and the state. In contrast, bourgeois political economy theory, which emerged in the 20th century, tends to downplay or ignore class conflict and focuses more on the benefits of the free market and private property ownership. Therefore, option A is the best choice.

Question 2

According to Legitimacy Theory,the annual report is:
A) A means to assist users in legitimately allocating scarce resources
B) A tool to legitimise the ongoing operations of the organisation
C) A legitimate account of the activities of the organisation for the period
D) All of the given options are correct.

Accepted Answer

Legitimacy Theory suggests that organizations use annual reports as a tool to justify and legitimize their existence and operations to stakeholders, aligning with societal norms and expectations.

Question 3

Managerial Stakeholder Theory suggests that annual reports will be used to:
A) Gain the support of powerful stakeholders
B) Report on the activities of management with respect to each stakeholder
C) Explain why profits may have been sacrificed in order to respect the minimum rights of some stakeholders
D) All of the given options are correct.

Accepted Answer

A

Question 4

The difference between Positive Accounting Theory and Legitimacy Theory is that:
A) Legitimacy Theory does not rely on the assumption that all action is driven by individual self-interest.
B) Legitimacy Theory makes no assumptions about the efficiency of markets.
C) Legitimacy Theory suggests that organisations have a 'social contract' with society.
D) All of the given options are correct.

Accepted Answer

All the given options correctly differentiate between Positive Accounting Theory and Legitimacy Theory. Positive Accounting Theory often assumes actions are driven by self-interest and focuses on the relationships within financial practices, while Legitimacy Theory emphasizes an organization's broader social obligations and its 'social contract' with society, not necessarily assuming market efficiency or self-interest as primary motivators.

Question 5

The difference between the managerial and moral perspectives of Stakeholder Theory is that:
A) The moral perspective is empirically testable
B) The moral perspective is more 'organisation-centred'
C) The managerial perspective is empirically testable
D) The managerial perspective holds that all stakeholders have certain minimum rights that must not be violated

Accepted Answer

DThe managerial perspective of Stakeholder Theory is indeed empirically testable because it focuses on the practical implications of managing relationships with stakeholders to benefit the organization. This perspective can be analyzed and tested through various business outcomes. On the other hand, the moral perspective holds that all stakeholders have certain minimum rights that must not be violated, emphasizing the ethical obligations of the organization towards its stakeholders, which is not about empirical testing but about ethical principles.

Question 6

The idea of the 'social contract' is that corporations only exist because they benefit:
A) Shareholders
B) Governments
C) Managers
D) Society

Accepted Answer

The social contract theory posits that corporations and businesses exist primarily for the benefit of society as a whole. As such, they have a broader responsibility beyond maximizing profits for shareholders or benefiting managers. Businesses are expected to contribute to the well-being of society and the economy, by generating employment opportunities, paying taxes, respecting the environment, and abiding by ethical norms. The government provides a regulatory framework and protection of property rights, but ultimately, it is society that grants legitimacy to the existence and operations of businesses.

Question 7

Which of the following statements is false?
A) Legitimacy Theory is derived from 'classical' political economy theory.
B) Legitimacy Theory suggests that organisations will act in a way that society perceives as legitimate.
C) Legitimacy Theory relies upon the notion of the 'social contract'.
D) Legitimacy Theory asserts that organisations will attempt to ensure that society perceives their actions as 'legitimate'.

Accepted Answer

The answer of Which of the following statements is false?
A)...

Question 8

Which of the following is not a means by which an organisation may attempt to legitimise its activities?
A) Adapting its output, goals and methods of operation to conform to prevailing definitions of legitimacy.
B) Attempting, through communication, to alter the definition of social legitimacy so that it conforms to the organisation's present practices, outputs and values.
C) Asserting its right to operate under the existing regulatory framework that has been determined by society.
D) Attempting, through communication, to become identified with symbols, values or institutions that have a strong base of legitimacy.

Accepted Answer

Asserting its right to operate under the existing regulatory framework that has been determined by society is not a means of attempting to legitimise an organisation's activities, but rather a statement of compliance with legal requirements. Legitimacy is about social acceptance and approval, regardless of legal requirements. A, B, and D are all means through which an organisation may attempt to gain legitimacy.

Question 9

Institutional Theory suggests which of the following?
A) While organisational structures are initially varied, they are gradually homogenised by competition, the state and professions.
B) While organisational structures are initially homogenous, they are gradually varied by competition, the State and professions.
C) The organisational structure is determined by institutional factors such as management style and organisational culture.
D) The organisational structure is determined by the organisation's most powerful stakeholders.

Accepted Answer

Institutional Theory suggests that over time, competition, the state, and professions create pressures that lead to the homogenisation of organisational structures. This is because certain structures become dominant and seen as legitimate, leading to their diffusion across organisations in a given field or industry.

Question 10

Which statement describes the relationship between Institutional Theory (IT),Legitimacy Theory (LT)and Stakeholder Theory (ST)?
A) IT is a normative theory while LT and ST are positive theories.
B) IT is a more detailed version of LT, and is broadly consistent with ST.
C) The mechanisms IT suggests firms will use to align the perceptions of their performance with society's values could include the mechanisms suggested by LT and ST.
D) The mechanisms IT suggests firms will use to align the perceptions of their performance with society's are different from the mechanisms suggested by LT and ST.

Accepted Answer

Institutional Theory (IT) proposes that firms will conform to the institutional environment in order to gain legitimacy and support from stakeholders. Legitimacy Theory (LT) suggests that firms will strive to gain legitimacy by meeting the expectations of society and stakeholders. Stakeholder Theory (ST) proposes that firms must consider the needs and expectations of a range of stakeholders, including society, in order to create long-term value. While these theories have different emphases and origins, they are broadly consistent with each other and can work together to help firms align their perceptions of performance with societal values. Therefore, choice C is the correct answer.

Question 11

Which of the following statements is characteristic of Stakeholder Theory?
A) Stakeholder Theory has both a normative and positive perspective.
B) Stakeholder Theory has neither a normative nor positive perspective.
C) Stakeholder Theory is a normative theory.
D) Stakeholder Theory is a positive theory.

Accepted Answer

Stakeholder Theory is characterized as having both normative and positive perspectives. The normative perspective focuses on what organizations ought to do in terms of their responsibilities to various stakeholders, while the positive perspective focuses on describing and understanding how organizations actually interact with stakeholders.

Question 12

Which of the following is false?
A) Isomorphism refers to the adaptation of an institutional practice by an organisation.
B) Normative isomorphism refers to when organisations adopt particular institutional practices.
C) Coercive isomorphism refers to when organisations change their practices due to stakeholder pressure.
D) Mimetic isomorphism refers to when organisations copy the institutional practices of other organisations for competitive advantage practices.

Accepted Answer

The answer of Which of the following is false?
A) Isomorphism...

Question 13

In relation to Political Economy Theory,which of the following statements is false?
A) Political Economy Theory views society, politics and economics as inseparable.
B) Political Economy Theory is derived from Positive Accounting Theory.
C) Legitimacy Theory and Stakeholder Theory are derived from Political Economy Theory.
D) Political Economy Theory can be divided into 'classical' and 'bourgeois' political economy. theories

Accepted Answer

Political Economy Theory is not derived from Positive Accounting Theory. Political Economy Theory views society, politics, and economics as inseparable and includes various sub-theories such as Legitimacy Theory and Stakeholder Theory. It can also be divided into classical and bourgeois political economy theories.

Question 14

The 'legitimacy gap' of a corporation will narrow when:
A) A corporation discloses good news about its behaviour but its actual behaviour declines.
B) A corporation discloses bad news about its behaviour but its actual behaviour improves.
C) Societal expectations of appropriate corporate behaviour increase.
D) None of the given options are correct.

Accepted Answer

The answer of The 'legitimacy gap' of a corporation will...

Question 15

The moral perspective of Stakeholder Theory holds that all stakeholders have the right to be treated fairly by an organisation:
A) Provided this improves the organisation's financial performance
B) Regardless of the impact on the organisation's financial performance
C) Because, in the long run, this will improve the organisation's financial performance
D) None of the given options are correct.

Accepted Answer

The moral perspective of Stakeholder Theory is based on the principles of fairness and justice, which implies that all stakeholders have the right to be treated fairly and equitably by an organisation, regardless of the impact on the organisation's financial performance. This means that organisations have ethical obligations to consider the interests and needs of all stakeholders, including employees, customers, shareholders, suppliers, and the wider community. The moral perspective of Stakeholder Theory recognises that financial performance is important for the sustainability and survival of an organisation, but it is not the primary objective. Instead, the primary objective is to create value for all stakeholders and contribute to the well-being of society as a whole. Therefore, choice B is the best answer.

Question 16

An example of a legitimising symbol would be:
A) The World Wide Fund for Nature assessing compliance with the Australian Minerals Industry Code
B) Monsanto employing the former CEO of Greenpeace Australia as a consultant
C) Changing the name of a company from 'British Petroleum' to 'Beyond Petroleum'
D) All of the given options are correct.

Accepted Answer

Legitimising symbols are actions or changes made by organizations to improve their public image and demonstrate their commitment to certain values or standards. All the given options (A, B, C) are examples of how companies might attempt to legitimize their operations or image in the public eye, by aligning with reputable organizations, hiring individuals with environmental credibility, or rebranding to reflect a commitment to sustainability.

Question 17

An organisation disclosing social and environmental information in response to societal expectations is an example of:
A) Mimetic isomorphism
B) Coercive isomorphism
C) Normative isomorphism
D) None of the given options are correct.

Accepted Answer

Normative isomorphism refers to organisations conforming to the norms and values of their institutional environment. In this case, the societal expectation for organisations to disclose social and environmental information is a normative pressure, which the organisation is conforming to. Mimetic isomorphism refers to organisations imitating the practices of other similar organisations, while coercive isomorphism refers to organisations conforming to regulatory or legal pressures. None of these options fit the given scenario as well as normative isomorphism does.

Question 18

Empirical findings consistent with Legitimacy Theory would be increased disclosure of:
A) Environmental good news, immediately following prosecutions for breaches of environmental standards
B) Environmental bad news, immediately following prosecutions for breaches of environmental standards
C) Environmental good news, immediately preceding prosecutions for breaches of environmental standards
D) Environmental bad news, immediately preceding prosecutions for breaches of environmental standards

Accepted Answer

Legitimacy Theory suggests that organizations will seek to maintain or repair their legitimacy in the eyes of their stakeholders, especially after an event that threatens their legitimacy, such as a prosecution for breaching environmental standards. Disclosing environmental good news immediately following such prosecutions can be seen as an effort to mitigate the negative impact and restore legitimacy.

Question 19

An organisation disclosing social and environmental information because a competitor was gaining a competitive advantage by doing so,is an example of:
A) Mimetic isomorphism
B) Coercive isomorphism
C) Normative isomorphism
D) None of the given options are correct.

Accepted Answer

Mimetic isomorphism occurs when organizations imitate or copy strategies, structures, or processes from other organizations, often in response to uncertainty or to gain legitimacy or competitive advantage, as illustrated by the organization disclosing information to match its competitor.

Question 20

An organisation disclosing social and environmental information in response to shareholder demands is an example of:
A) Mimetic isomorphism
B) Coercive isomorphism
C) Normative isomorphism
D) None of the given options are correct.

Accepted Answer

Coercive isomorphism occurs when an organization changes due to pressure from other organizations or societal expectations, such as shareholder demands for social and environmental information disclosure.

Quiz 8: Unregulated Corporate Reporting Decisions: Considerations of Systems-Oriented Theories

The difference between 'classical' and 'bourgeois' political economy theory is that:

According to Legitimacy Theory,the annual report is:

Managerial Stakeholder Theory suggests that annual reports will be used to:

The difference between Positive Accounting Theory and Legitimacy Theory is that:

The difference between the managerial and moral perspectives of Stakeholder Theory is that:

The idea of the 'social contract' is that corporations only exist because they benefit:

Which of the following statements is false?

Which of the following is not a means by which an organisation may attempt to legitimise its activities?

Institutional Theory suggests which of the following?

Which statement describes the relationship between Institutional Theory (IT) ,Legitimacy Theory (LT) and Stakeholder Theory (ST) ?

Which of the following statements is characteristic of Stakeholder Theory?

Which of the following is false?

In relation to Political Economy Theory,which of the following statements is false?

The 'legitimacy gap' of a corporation will narrow when:

The moral perspective of Stakeholder Theory holds that all stakeholders have the right to be treated fairly by an organisation:

An example of a legitimising symbol would be:

An organisation disclosing social and environmental information in response to societal expectations is an example of:

Empirical findings consistent with Legitimacy Theory would be increased disclosure of:

An organisation disclosing social and environmental information because a competitor was gaining a competitive advantage by doing so,is an example of:

An organisation disclosing social and environmental information in response to shareholder demands is an example of: