Which of the Following Statements Is Correct

question 31

Multiple Choice

Which of the following statements is correct?

• A) Under legitimacy theory, organisations disclosing information, in an endeavour to appear legitimate to the societies in which they operate.
• B) Under legitimacy theory, accounting disclosure policies are considered to constitute a strategy for influencing the organisation's relationships with the parties, or stakeholders, with which it interacts.
• C) Legitimacy Theory relies on the theoretical notion of a social contract, where there is multiplicity of implicit and explicit expectations that society has about how an organisation should conduct its operations.
• D) Organisations maintain their right to exist by compliance with their social contract by establishing congruence between the social values associated with or implied by their activities and the norms of acceptable behaviour in the larger social system of which they are a part.
• E) None of the given answers.

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Definitions:

Efficient Markets

A theory that suggests that financial markets fully reflect all available information at any given time, making it impossible to consistently achieve higher returns.

Investment Capital

Funds invested in a business for the purpose of furthering its operations and generating income or profit.

Profit Opportunities

Situations or conditions that allow for the chance to generate earnings above the norm.

Economic Profits

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs.