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Legitimacy Theory

References

  • Craig Deegan, 2000, Financial Accounting Theory, Mc Graw Hill
  • Adams, C.A. (1999), The Nature and Processes of Corporate Reporting on Ethical Issues 4,The Chartered Institute of Management Accountants (CIMA), London, pp. 1-64.
  • Deegan, C., Rankin, M. and Tobin, J. (2002), “An Examination of the Corporate Social and
  • Environmental Disclosures of BHP from 1983-1997: A Test of Legitimacy Theory”,

Accounting, Auditing and Accountability Journal, Vol 15, No 3, pp. 312-43.

  • Suchman, M.C. (1995), “Managing legitimacy: Strategic and institutional approaches”,

Academy of Management Review, Vol. 20 No.3, pp. 571-610

  • Enrique Dans,2015,Volkswagen And The Failure Of Corporate Social Responsibility, Forbes, September 2016, http://www.forbes.com/sites/enriquedans/2015/09/27/volkswagen-and-the-failure-of-corporate-social-responsibility/#4331bb136128
  • Russell Hotten, 2015, Volkswagen: The scandal explained, BBC, September 2016, http://www.bbc.com/news/business-34324

Conclusion

  • Recalling cars and accepting to pay fines in U.S
  • Resignation to CEO

Germany has a great economy and would handle things differently to U.S.

  • VW accepted the mistake and didn't focus on lobbying
  • BP & Oil spill in Gulf was linked to major lobbying

Thank you!

Irregularities & Reactions

France: Media Com media agency warned the newspapers that it would cancel planned campaigns

By 2015, 34 law suits filed in United States & Canada

28 June 2016: The company agrees to pay $15.3 billion to civil actions in U.S

Compensation:

9 November 2015: Offered US $100,000 vouchers and US $200,000 vouchers for trade-ins

  • Countries such as Britain have changed their tax system in its favor.
  • One-third of its car fleet runs off the fuel

Volkswagen's Response

Introduction to the Theory

September 2015- Refit 11 million vehicles affected

28 September 2015- VW suspended heads of various departments: Brand development, R & D & Technical development

  • Launched an internal inquiry

A year before the outbreak of the scandal the company insisted

that discrepancies were technical glitches.

Social

Contract

Honest or

Appropriate

1. Take genuine action

2. Change perceptions

3. Deflect attention

4. Change evaluation

Volkswagen Scandal

VW EMISSIONS SCANDAL

Current Car Owners- Feel being cheated

Social Public: Concerns on Environment Pollution

18 September 2015- US EPA issued a notice of Clean Air Act

-Diesel Dupe

-Cars sold had a 'defeat device' or software- Change the performance accordingly to improve results

Type : Emissions Violations

Cause: Engaging full emissions control only during testing

Presented by: Riyas, Nadeesha, Astha & Valentino

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