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The relevance of theories of political economy to the understanding of financial reporting in South Africa: the case of value added statements

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  • Chris Van staden

Abstract

In South Africa there has been a sustained increase in the level of publication of the value added statement since the mid 1980s. Currently nearly 50% of all companies listed on the Johannesburg Stock Exchange publish a value added statement as part of their annual financial statements and a much higher proportion of the top 100 companies in the industrial sector publish the statement. The aim of this research is to contribute towards an understanding of the motivation for the sustained high level of publication of the value added statement, which is confined to South Africa at present.The findings indicate that legitimacy theory and the political economy of accounting theory provide the best explanation for the continued publication of the statement in South Africa. Evidence was also found that supports the use of the value added statement for legitimising current action and behaviour rather than reporting objectively on social issues. This paper extends the literature on legitimacy theory to a social disclosure, the publication of the value added statement. It also contributes to the literature by showing that legitimising behaviour is also observed when a major political change brings uncertainty as to society's expectations of the economic system and the role of private enterprise.

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  • Chris Van staden, 2003. "The relevance of theories of political economy to the understanding of financial reporting in South Africa: the case of value added statements," Accounting Forum, Taylor & Francis Journals, vol. 27(2), pages 224-245, June.
    • Handle: RePEc:taf:accfor:v:27:y:2003:i:2:p:224-245
    DOI: 10.1111/1467-6303.00103
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    Citations

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    Cited by:

    1. Giuseppe IANNIELLO, 2010. "The voluntary disclosure of the value added statement in annual reports of Italian listed companies," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 56(8), pages 368-378.
    2. de Villiers, Charl & van Staden, Chris J., 2006. "Can less environmental disclosure have a legitimising effect? Evidence from Africa," Accounting, Organizations and Society, Elsevier, vol. 31(8), pages 763-781, November.
    3. Coetzee, Charmaine M. & van Staden, Chris J., 2011. "Disclosure responses to mining accidents: South African evidence," Accounting forum, Elsevier, vol. 35(4), pages 232-246.
    4. Franziska Hesser & Daniela Groiß-Fürtner & Leona Woitsch & Claudia Mair-Bauernfeind, 2023. "Ex-Ante Eco-Efficiency Assessment of Dendromass Production: Conception and Experiences of an Innovation Project," Land, MDPI, vol. 12(4), pages 1-16, April.
    5. Axel Haller & Chris J. van Staden & Cristina Landis, 2018. "Value Added as part of Sustainability Reporting: Reporting on Distributional Fairness or Obfuscation?," Journal of Business Ethics, Springer, vol. 152(3), pages 763-781, October.
    6. Steven F. Cahan & Chris J. Van Staden, 2009. "Black economic empowerment, legitimacy and the value added statement: evidence from post‐apartheid South Africa," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(1), pages 37-58, March.
    7. Arangies, G & Mlambo, Chipo & Hamman, W D & Steyn-Bruwer, B W, 2008. "The value-added statement: An appeal for standardisation," MPRA Paper 25970, University Library of Munich, Germany.

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