Accountability

Accountability is a concept that refers to the state of being liable and answerable to someone for something. Accountability is important in democratic societies because it seeks to redress power differentials and information asymmetry by institutionalizing rights to information. In organizational settings, accountability is important because, according to agency theory, managers cannot be expected (or, rather, trusted) to provide full disclosure of information in all stakeholders’ interests. Without accountability, managers and organizations are assumed to resort to opportunism. This entry covers the types of corporate accountability, the ingredients of accountability, questions of measurement, organizations’ responses to the need for accountability, and the linkages between accountability and corporate reputation.