Question

What is the relationship between legitimacy theory and s company's going concern?

Answer 1

For understanding relationship between legitimacy theory and company’s going concern, let’s understand legitimacy theory and going concern concept.

As per legtimacy theory an organization make ensure that this organization operates its’ business activities within the bounds & norms of the society. As we know that every type of organization operates within society hence without following terms & norms of the society an organization can not operate within the society.

Going concern tells about running of the organization for indefinite time because it is assumed that an organization will run for indefinite time.

Now let’s see the relationship between both.

As we have already discussed above that both concept are closely correlated because without following legtimacy theory an organization can not run for indefinite time thus it is clear that going concern can not be meet. So legitimacy theory and going concern both are closely related because without follow legitimacy theory an organization can not imagine about the running of the organization for indefinte time thus going concen concept will not meet without legitimacy theory.