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Chapter 8. Written for the senior undergraduate accounting and postgraduate student, Financial Accounting Theory retains the same basic strengths that made its predecessor a market leader. It has a writing style that is easy to read and understand, includes critical evaluation and balanced discussion of different theories of accounting that will spark student interest. The book also develops analytical reasoning by challenging students to think about accounting issues at hand, and formulate opinions. The learning objectives of this chapter are to: (1) understand how community or stakeholders'' perceptions can influence the disclosure policies of an organisation; (2) understand how legitimacy theory, stakeholder theory and institutional theory can be applied to help explain why an entity might elect to make particular voluntary disclosures; (3) understand what we mean by organisational legitimacy and how corporate disclosures within such places as annual reports and corporate websites can be used as a strategy to maintain or restore the legitimacy of an organisation; (4) understand how the respective power and information demands of particular stakeholder groups can influence corporate disclosure policies; and (5) understand the view that a successful organisation is one that is able to balance or manage the demands (sometimes conflicting), including information demands, of different stakeholder groups.