Great Deal! Get Instant $10 FREE in Account on First Order + 10% Cashback on Every Order Order Now

this question is regarding accounting theory Document Preview: Q 1 Let us assume that the government has become concerned that existing disclosure regulation , tends to fixate on thef inancial...

1 answer below »
this question is regarding accounting theory
Document Preview:

Q  1    Let  us  assume  that  the  government  has  become  concerned  that  existing   disclosure    regulation  ,  tends  to  fixate  on  thef  inancial  performance  of   organisations    but  fails  to  address  other  aspects  of  corporate  performance   including  a  failure  to  provide  information  about  corporate  social  and   environmental  impacts  as  well  as  about  various  initiatives  and  investment  an   organization  has  undertaken  to  improve  its  social  and  environmental   performance  .As  such  the  government  has  decided  to  introduce  legislation  that   will  require  business  corporation  to  provide  information  about    the  social  and   environmental  impacts    of  the  operations  as  well  as  the  social  and  environmental   initiatives  undertaken  by  the  corporations  .You  are  required  to  do    the  following.   a) Explain    from  a  public  interest  theory  perspective  the  rational  for  the   government  introducing  the  legislation  and  how  the  government  will   ultimately  assess  whether  any  proposed  legislation  should  actually    be   introduced     b) Predict    from  a  capture    theory  perspective  the  types  of  constituents  that   will  benefit  in  the  long  run  from  any  social  and  environmental  disclosure   legislation   c) Predict  from  an  economic  interest  group  theory  perspective  of  regulation   whether  any  potential  legislation  to  be  introduced  will  lead  to  an  increase   in  the  accountability  despite  any  implication  that  this ...

Answered Same Day Dec 29, 2021

Solution

Robert answered on Dec 29 2021
120 Votes
Answer A)
The public interest theory was developed by Arthur Pigou that explains the regulations
egarding the protection and benefit of the public in a large scale. The major argument of
this theory is public interest that does not exist according to the theory. But the theory still
not proved the welfare economic rationale for the regulation of public interest. It holds the
egulations that are supplied in response to the demand for co
ection of insufficient
market practice. It is essential to bind the society with regulations otherwise, without the
egulations, society cannot peace and ties up the whole people in norms. There would be
much unacceptable human behavior so, social regulation theory is essential. It doesn’t
consider particular vested interest in which it operates rather than private interest of
egulator which is unacceptable. The rational economic person assumption believes that
politicians and regulators are motivated to gain their self rather than acting for the public
interest. The legislation is set to balancing the social costs and social benefits of the
egulations. Society needs confidence that the capital market efficiently allocates the
esources to productive assets. The organizations must change according to the community
expectations because; they should show that what they are doing is also changing. The
organizations will be penalized if they fail to comply with the community expectation. They
should pay attention to what society expects from the businesses and from a particular.
The organizations must have to accept the community expectations or legitimacy theory in
order to attain success. The BHP sustainability Report 2008 referenced the importance of
complying with community expectations. It is mentioned that there is always a risk in
health safety and environmental incidents that may negatively impact the authority to
operate. The above statements clearly express the legitimacy theory that reflects the public
position in the corporate environment.
Answer B)
The George Stigler was the developer of the capture theory. The capture theory states that
the businesses can be benefited if they comply with the capture theory. According to the
capture theory, the State Regulatory agency acts in...
SOLUTION.PDF

Answer To This Question Is Available To Download