Legitimacy theory used in ESG posits what?
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Legitimacy theory applied in the context of Environmental, Social, and Governance (ESG) performance posits that stakeholders' perceptions of a company's legitimacy drive ESG conduct and financial outcomes. This theory explores the relationship between ESG performance, stakeholder legitimacy, and firm financial performance. Companies engaging in ESG practices seek to legitimize their operations and activities to meet stakeholder expectations and enhance their reputation. Studies show that ESG disclosure and performance can mitigate firm-specific risks, reduce volatility, and signal compliance with sustainability norms, thus building reputation capital with investors. Additionally, sustainability reporting is influenced by corporate characteristics like firm size, industry type, and assurance practices, aligning with legitimacy theory to legitimize business operations and maintain reputation .
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| Papers (4) | Insight |
|---|---|
| The Legitimacy Theory in ESG posits that organizations must align their actions with societal norms and values to maintain legitimacy by disclosing sustainability information. | |
| Legitimacy theory in ESG suggests that ESG disclosure and performance can reduce idiosyncratic risks by signaling compliance with sustainability norms, enhancing reputation capital with investors post-IPO. | |
15 Citations | Legitimacy theory in ESG examines firm greening, stakeholder legitimacy, and financial performance, addressing greenwashing temptations and the impact on ESG and financial outcomes. |
| Legitimacy theory in ESG suggests that disclosure serves to address stakeholders' changing perceptions. The study found no significant ESG disclosure changes by Atlantia post-catastrophic event. |
Related Questions
What are the most important papers on legitimacy work?5 answersThe most important papers on legitimacy work encompass a variety of perspectives. Lefsrud, Graves, and Phillips emphasize the significance of legitimacy work in shaping others' evaluations to appear desirable and appropriate. Warner delves into the application of legitimacy in social work, highlighting the importance of fairness, quality of treatment, and decision-making in maintaining legitimacy. Jansson and Isaksson explore the connection between employer branding and legitimacy, showcasing how activities are performed to attract potential employees and strengthen institutional practices. Bourgoin, Laszczuk, and Langley present a case study on justifying the existence of a change agency unit in a challenging political context, shedding light on the complexities of legitimacy work. Lastly, the unstructured abstract discusses the concept of legitimacy as social infrastructure in healthcare technology adoption, emphasizing its role in explaining the acceptance of new technologies in practice.
What are the sources of political legitimacy?5 answersPolitical legitimacy can stem from various sources. These include a well-functioning state bureaucracy, popular consultation with the consent of the governed, and the principle of respecting current laws pending revision through legal channels. Additionally, legitimacy can be derived from compellence, substantial interests, and shared values at the international level, as seen in the construction of the global political economic order. Furthermore, there are distinctions among conceptions of political legitimacy based on the grounds of legitimacy, such as will-based, belief-based, and fact-based conceptions. A hybrid conception of political legitimacy is also proposed, emphasizing the importance of responding to evidence for what there is most reason to do, beyond just respecting the political will. Ultimately, a failure to protect the population from potential catastrophic outcomes can be a distinct source of illegitimacy, highlighting the need for accountability and higher standards in political decision-making.
What is the legitimacy theory?5 answersLegitimacy theory is a concept that focuses on the justification of authority in governance. It examines how organizations and institutions establish and maintain legitimacy in the eyes of their stakeholders. The theory recognizes that legitimacy is not a fixed state but a dynamic process influenced by various factors. It encompasses behaviors, attitudes, and processes that contribute to the perception of legitimacy. The Concentric Diagram of Legitimacy provides an organizing tool for understanding the different dimensions of legitimacy theory. Legitimacy theory has evolved from a normative approach to a more empirical one, considering the diverse sources of authority beyond the state. It also intersects with other theories such as stakeholder theory and environmental information disclosure theory. Further research is needed to deepen our understanding of the role legitimacy plays in governance.
Does ESG disclosure affect company legitimacy?5 answersESG disclosure can affect company legitimacy. Companies that practice ESG and communicate their efforts are seen as complying with sustainability-related norms, which helps them acquire and maintain a societal license to operate. ESG disclosure can reduce idiosyncratic volatility and downside tail risk, thus mitigating firm-specific financial risks. External stakeholders, such as investors and policymakers, play a role in pressuring companies to improve their ESG commitments. However, the relationship between external stakeholders and ESG disclosure is still ambiguous. In some cases, companies may not significantly change their ESG disclosure even after a catastrophic event that negatively affects their corporate image. Overall, ESG disclosure is becoming increasingly important in the capital market, influencing asset pricing and corporate bond credit spreads.
What is legitimacy?4 answersLegitimacy is a concept that refers to the acceptance and justification of rule. It is a belief held by individuals that a particular authority or social order has the right to make binding decisions and that there is a moral obligation to comply with those decisions. Legitimacy can be seen as a sense of obligation or willingness to obey authorities, which then translates into actual compliance with laws and regulations. It is influenced by factors such as trustworthiness of government and procedural justice. Legitimacy is a key concept in political science and has deep normative roots in democratic theory. It is used to assess the degree to which a regime, whether democratic or autocratic, is viewed as acceptable and righteous by its citizens.
What is communication legitimacy?4 answersCommunication legitimacy refers to the perceived credibility and acceptance of communication practices within a profession or organization. It involves establishing the legitimacy of a profession or field by demonstrating its value and relevance. Legitimacy can be achieved through various means, such as establishing partnerships and engaging in corporate social responsibility initiatives. Legitimacy is important for the success and continued acceptance of a profession, as it requires both internal and external recognition. Communication legitimacy can also be influenced by the use of resources and effective communication strategies. In the context of corporate communication, legitimacy is closely tied to the ability to effectively transmit information and messages through various channels. Overall, communication legitimacy is a complex concept that involves demonstrating the value and relevance of communication practices within a profession or organization.