Abstract
PurposeThis paper seeks to examine the introduction, in the UK, of reporting on social and environmental matters in the Companies Act 1985 (Operating and Financial Review and Directors' Report etc.) Regulations 2005 and the subsequent changes embodied in the Companies Act 2006. It aims to explore the potential impact of these reporting requirements on corporate legitimacy. Legitimacy is important because it reflects, and arises out of, society's support for the activities of the company.Design/methodology/approachThe paper compares the Companies Act 1985 (Operating and Financial Review and Directors' Report etc.) Regulations 2005 with the Companies Act 2006. A postal survey was used to collect data from 79 companies that were affected by the operating and financial review. The reactions of different stakeholder groups to the changes in the law are assessed using secondary data sources, and issues surrounding legitimacy are analyzed using appropriate literature.FindingsCompanies that had to comply with the requirements of the operating and financial review were sufficiently prepared for its implementation and, given the choice, preferred the operating and financial review to be statutory. The authors therefore argue that the reasons for repealing the operating and financial review were overstated. Also, legitimacy theory indicates that the new reporting requirements are unlikely to meet the information needs of all stakeholders.Originality/valueThe paper provides a valuable analysis of how corporate social responsibility, which is deemed to be important for sustainable development, has been incorporated in law. It also provides a valuable analysis of how the law will affect corporate legitimacy.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
More From: Corporate Governance: The international journal of business in society
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.