Theoritical Prespective on Voluntary Disclosure by Bp Plc in Regards to Deepwater Horizon
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Theories behind the voluntary disclosure of Deepwater Horizon Disaster by BP Plc. | | | Prepared by : Gajanayagam Jeyasundram |
This paper examines the relevant theory that explains public disclosure by big corporations in disclosing corporate mishaps that has environmental, social and economic consequence. We look at Deepwater Horizon in particular and its disclosure by BP. |
Num | Content | Page | 1.0 | Introduction 1.1 BP Plc.
1.2 Deepwater Horizon Disaster | 3-4 | 2.0 | Legitimacy Theory vs. Stakeholder Management Theory2.1 Legitimacy Theory 2.2 Stakeholder Management Theory | 4-6 | 3.0 | Conclusion | 6 | 4.0 | Reference List. | 7 | | | |
The Environmental disclosure by…show more content… The oil leak occurred in the Trans Alaska pipe line. Again, management oversight was cited as a reason. BP failed to ensure the pipes are properly maintained.
There numerous other blowouts, oil leaks etc. Deepwater Horizon garnered a lot of attention because it was one of the largest and with the constant media attention it received.
Hence, there is clear case of legitimacy crisis on BP that would lend credence that voluntary disclosure by BP was pivot in ensuring their legitimacy in the eyes of the public. Not only that , BP has replaced the CEO John Brown. (The Spill 2010)
2.0 Legitimacy theory vs. Stakeholder Management Theory
Legitimacy theory and stakeholder holder management theory are both system-oriented theory. The System based perspective entail that entity is assumed to be influenced by and in turn to have influence upon the society. They both entail usage of accounting disclosures as a strategy to management relationship with the society or other parties. (Gray, Owen &Adams 1996)
2.1 The legitimacy theory
The legitimacy theory states that corporate firms have a social contract with the society.
The social contract is the at the core of legitimacy theory. Social contract is essential a political concept. It essential meant that an inviduals whom enjoys absolute freedom in his natural state ,surrender part of their freedom to a central authority,