Corporate Social and Environmental Disclosure †MyAssignmenthelp

Question: Discuss about the Corporate Social and Environmental Disclosure. Answer: Introduction: According to the Chamber`s theory, it is an essential role of accounting to provide information about the entity`s capacity to adapt. The concept of `capacity to adapt`, is a technique or an accounting measure which is directly related to the liquid resources that would be received if an being or a business were to sell its assets. Costs incurred in selling would be subtracted from it (Deegan, 2013). In case all things are equal, the higher the market value of the company`s assets, the higher is its capacity to adapt to the changing situations. In simple terms, this means that the company would be able to utilize that money for some other purpose. In cases, where the company has a highly specialized asset such as a blast furnace, which does not have an available market are considered to have a low capacity to adapt. In case of a blast furnace, the asset has little or no market value, hence it has a minimum contribution to the organization`s capacity to adapt. The chamber`s theory suggests that a firm should value its assets at their current cash equivalents which is the amount that is expected to be received by the firm in case the asset is sold. With respect to the Contemporary accounting approach of asset valuation, the assets that cannot be sold separately, for example- goodwill would be deemed to have a zero value for the purpose of financial statement. The Chambers theory states that all assets should be determined on the same basis which is the resources(liquid) received in case they are sold, it is often argues that the values of all such assets should be added together (Setyorini Ishak, 2012). This concept contrasts with the common theory, which states that assets belonging to different classes have a different way of valuation, although a total sum of all assets is stated. This problem is often referred to as the `additivity problem`. The public interest theory runs on the assumption that the markets are highly fragile and they have the capability to operate in favour of an individual and that too inefficiently. It deems to ignore the interests of the society as a whole. Hence, in order to monitor such markets, it is believed that government intervention is critical (McCormick Tollison, 2012). The government tends to monitor and regulate the market in a way that makes them operate in favour of the society/`s interest. The resources are allocated effectively in his situation. Developed by Arthur Cecil Pigou, the public interest theory is an economic theory because regulations are critical as they are prepared to protect the interests of the society. Therefore, according to the public-interest theory, the decision of the Australian government with respect to the case study is incorrect, the private players tend to manipulate the system and hence it is important to implement regulations (Scherer, Palazzo Matten, 2014). Certain problems arise from this like the extent of regulation and the surety that the act is in favour of the public. The Capture theory designed by the political scientist, Hertog states that industries affected by the regulations often tend to manipulate it in order to suit their individual interests. In such a case, the regulation does not hold any importance as they are altered. Hence, over a given period, the regulations are useful for the interests of the concerned industries. Hence, the decision of the government with respect to this theory can be justified as with time, the regulations are manipulated and therefore, no regulations would serve the situation better. The economic interest group theory of regulation states that regulations are a set of rules laid down by the forces of demand and supply. One party stands on the supply said while the interest group is on the demand side (Berry Wilcox, 2015). Regulations according to this theory are developed by the industries and thus created in favour of the industry. This arises from the problem of public interest theory. Thus, it can be stated that, Australian government made the right choice behind implementing no regulations, as it would have had to balance the interests of different group, which would have led to conflicts. The bank unveiled this plan so that it could be viewed in positive light. The strategy could be because they owed a particular duty to the stakeholders to form such a strategy due to ethical responsibilities. They offer services which are crucial and necessary and thereby helping them to make huge profits, the interest rates tend to fluctuate between high and low levels thus to being wanted to gain a bad reputation, the bank unveiled the plan (Setyorini Ishak, 2012). This is based on the Positive Accounting Theory, which predicts how the groups interact with one another in an environment. In this case, ANZ, made a voluntary social disclosure to public to avoid the political costs imposed on them. In relation to the public interest theory of regulation, the government`s motives can be explained. These actions are based on the interest of the society rather than in favour of the interest of the politician (Moosa, 2015). On the other hand, however if the economic based theory of regulation is taken like the private interest theories of regulation, this would have deemed the politicians to take actions which served their own self interest and help them to get re-elected again. The statement is true that community concern would not be that large if the bank was not earning high amount of profits. Since banks are so profitable, customers tend to think why these profits are not passed down by reducing the fees or interest rates on loans. If the bank was incurring losses or not making adequate profits, then the customers would understand their reason behind the high fees charged (ANZ first-half profit up 6pc to $2.9 billion, 2017).However, the bank tends to argue that they want to maximize their gains for the stakeholders. The action of the banks will be depending upon various perspectives. If the government tends to take certain actions against the banks in order to win votes then the banks might adopt income reducing plans and strategies. This would help in decreasing the ability of the government to justify its actions (ANZ posts massive $3.4bn profit, 2017). In case the management of the bank does not think that the society or the government would act positively to reduced profits then the income reducing plans will not be adopted. In other cases, if the management believes that the need of the hour is to be objective then, they would manipulate the accounts and get desired results. Reference List: ANZ first-half profit up 6pc to $2.9 billion. (2017).ABC News. Retrieved 15 November 2017, from https://www.abc.net.au/news/2017-05-02/anz-first-half-profit-up-6-percent-to-$2.9-billion/8488400 ANZ posts massive $3.4bn profit. (2017).NewsComAu. Retrieved 15 November 2017, from https://www.news.com.au/finance/business/banking/anz-has-posted-a-massive-35-billion-halfyearly-profit-up-sharply-on-last-year/news-story/557ea3cf386a2cc7fdf393ab2e80f1e6 Berry, J. M., Wilcox, C. (2015).The interest group society. Routledge. Deegan, C. (2013).Financial accounting theory. McGraw-Hill Education Australia. McCormick, R. E., Tollison, R. D. (2012).Politicians, legislation, and the economy: An inquiry into the interest-group theory of government(Vol. 3). Springer Science Business Media. Moosa, I. A. (2015). Definition and Theories of Regulation. InGood Regulation, Bad Regulation(pp. 1-15). Palgrave Macmillan UK. Scherer, A. G., Palazzo, G., Matten, D. (2014). The business firm as a political actor: A new theory of the firm for a globalized world.Business Society,53(2), 143-156. Setyorini, C. T., Ishak, Z. (2012). Corporate social and environmental disclosure: A positive accounting theory view point.International Journal of Business and Social Science,3(9).