Lecture 5
Chapter 8 Unregulated Corporate Reporting Decisions: Consideration of Systems-Oriented Theories

Question 1: In relation to Political Economy Theory, which of the following statements is false?
A: Political Economy Theory views society, politics and economics as inseparable
B*: Political Economy Theory is derived from Positive Accounting Theory
C: Legitimacy Theory and Stakeholder Theory are derived from Political Economy Theory
D: Political Economy Theory can be divided into “classical” and “bourgeois” political economy theories

Question 2: The difference between “classical” and “bourgeois” political economy theory is that:
A*: “Classical” political economy theory explicitly considers class conflict and the role of the state in its analysis while “bourgeois” political economy theory does not
B: “Bourgeois” political economy theory explicitly considers class conflict and the role of the state in its analysis, while “classical” political economy theory does not
C: “Classical” political economy theory is a normative theory whereas “bourgeois” political economy theory is a positive theory
D: “Bourgeois” political economy theory is a normative theory whereas “classical” political economy theory is a positive theory

Question 3: Which of the following statements is false?
A: Legitimacy theory is derived from “classical” political economy theory
B*: Legitimacy theory suggests that organisations will act in a way that society perceives as legitimate
C: Legitimacy theory relies upon the notion of the “social contract”
D: Legitimacy theory asserts that organisations will attempt to ensure that society perceive their actions as “legitimate”

Question 4: The idea of the “social contract” is that corporations only exist because they benefit:
A: Shareholders
B: Governments
C: Managers
D*: Society

Question 5: The “legitimacy gap” of a