Can less environmental disclosure have a legitimising effect? Evidence from Africa

Organizational legitimacy theory predicts that corporations will do whatever they regard as necessary in order to preserve their image of a legitimate business with legitimate aims and methods of achieving it. Legitimacy is mostly used in the social and environmental accounting research (SEAR) literature to support the idea that social disclosures will be maintained at present levels, or increased over time, to avert legitimacy crises. However, the SEAR literature contains some references to reasons for, and incidents of, reductions in social disclosures. We submit that legitimacy theory predicts these reductions as much as it predicts maintaining or increasing disclosure levels. We conduct a content analysis of more than 140 corporate annual reports over a 9-year period in order to identify the trends in environmental disclosure by South African companies over time. We find a reduction in environmental reporting after an initial period of increases for both Mining companies and Top-100 industrial companies. The decrease for Mining companies was bigger than that for Top-100 companies, both overall and when the results were split between specific and general information. The publication of general and specific information increased from 1994 to 1999; disclosure of specific information then declined by five times more than the decline in disclosure of general information. These trends are consistent with legitimacy theory and we conclude that legitimising objectives may also be served by changing the type (general/specific) or reducing the volume of environmental disclosures. © 2006 Elsevier Ltd. All rights reserved.