Accounting Theory

Topics: Sociology, Gulf of Mexico, Gulf Coast of the United States Pages: 4 (1322 words) Published: January 15, 2013
1. Introduction
This report will identify a crisis facing BP company, the Gulf of Mexico spill, and investigate how the organization response to the society. In this report, it will use Legitimacy theory to explain BP’s response to this event. Legitimacy theory can be treated as a explanation for voluntary corporate disclosures in annual report. As (Dowling&Pfeffer, 1975) says a corporation must act in congruence with norms and society value. First of all, Legitimacy theory is based on the concept of substantive rationality and replies upon the notion of a social contract. This theory asserts that organizations seek to ensure that they operate within the bounds and norms of their respective societies (Ramon Mullerat, 2010) .It aims to conform to norms and value of society. As a company, it always use annual report to legitimize the ongoing operation, however, in common situations, it often discloses good news, but its actual behaviors decline which is called legitimacy gap.

2. The case
2.1 Context
In April 20, 2010, a semi-submersible drilling platform belongs to BP occurred explosion in American Mexico gulf. It caused 11people die and 17 people injured after 36 hours (CBC News, 2010). BP Company announced that it wills to response for this event. The Gulf of Mexico spill has become the worst environmental crisis in America. Except the direct cost, it will also attack people’s life, such as air and water safe. At the same time, it is a huge disaster for seaside animals. (Xinhua News Agency) reports that the United States Coast guard, government agencies, local residents and BP are trying to prevent further deterioration. This event causes a deep effort for surround regions. Obama (2011) says that America will face a huge finance crisis.

2.2 Data
Annual report will be chosen for the main corporate disclosure vehicle. Above all, it is an efficient means of highlighting of whole company. Annual report will inform people how the organization...
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