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Half A Defense Of Positive Accounting Research And Issues

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Question:

Discuss about the Half a Defense of Positive Accounting Research.
 
 

Answer:

Introduction

The research article ‘Half a Defense of Positive Accounting research’ has emphasized on the contribution of positive accounting theory in practical life. The main aim of the research paper is to describe the significance of positive research in accounting field and to draw attention of the researchers on some drawbacks existing in the theory. The main objective of the research paper is to illustrate the importance of positive accounting in enhancing the productivity and efficiency of business entities. The research paper analyses and examines the argument related to the effectiveness of positive accounting theory in achieving the scientific aims and objectives of accounting research. The overall research paper is undertaken to identify the limitations of positive accounting theory and recommend the adoption of some other better theoretical models for successful completion of accounting researches (Dunmore 2009).

The research paper is of high significance as accounting researches are carried out for resolving complex accounting issues and thus adoption of theoretical models based on practical-based outcomes is very necessary. Therefore, it is highly essential that researchers identify the shortcoming of positive theory in achieving the scientific objective of accounting research (Dunmore 2009). The present paper presents an analysis of the research article ‘Half a Defense of Positive Accounting research’ through summarizing its main arguments, stating the research question, discussing its theoretical framework, analyzing its significance and limitations, and at last drawing implications of the critique in the conclusion section.

 

Summary of the Article

The research article is based on analyzing the efficiency of positive accounting in conducting accounting researches. The success achieved in accounting researches through the adoption of positive accounting theory is being examined in the research article.  As per the theoretical arguments presented in the paper, positive accounting theory (PAT) was developed by Watts and Zimmerman for explaining the accounting practices used by business entities. The theory as developed was claimed to be based on principles of natural sciences and thus was regarded to be highly effective in achieving the practical outcomes of accounting research (Deegan, 2014). The theory was believed to be highly efficient in explaining the actual practices of accounting as compared to normative accounting theories that only seeks to describe best accounting practices (Chatfield and Vangermeersch, 2014). However, the author in the article has pointed out that PAT theory is subject of criticism since after its mergence in 1970’s (Dunmore 2009).

This is due to the various drawbacks existing in the theory illustrated by various accounting researchers that restricts it from achieving the scientific aims and objectives of accounting research. This is because there is relatively no development in the theory after is emergence and thus it is not able to provide an appropriate understanding of the contemporary accounting concepts (Wolk et al., 2012). The major finding of the research article is that positive accounting theory needs to be reformed in order to incorporate contemporary accounting issues and thus provide an appropriate explanation to the accounting practices. Also, the author has proposed that accounting researches need to adopt a better theoretical model for achieving the scientific aims and objectives of accounting research. Thus, the author has advocated the development of better accounting theories and has highlighted the scope of further development in accounting field. The development of better accounting theories is essential for business entities so that they are able to resolve complex accounting problems appropriately. The achievement of practical-based outcomes is essential from accounting researches so that it can be tested adequately as comparison to the qualitative solution that cannot be accepted due to lack of testing (Mourik, 2013). The accounting researches need to provide a quantitative solution for the accounting problems so that business entities can test and examine it appropriately before its implementation. Thus, the overall research article has evaluated the future potential of positive accounting theory in achieving the scientific objectives of accounting research (Dunmore 2009).

 

Research Question

The overall research article is based on testing the following hypothesis:

H0: Positive accounting theory is able to achieve scientific aims and objectives of accounting research.

H1: Positive accounting theory is not able to achieve scientific aims and objectives of accounting research.

The above hypothesis developed is tested and analyzed in the research article through evaluating the following research questions:

  • What is the importance of positive accounting theory in enhancing the productivity and efficiency of business entities?
  • What are the major limitations associated with the use of positive accounting theory in accounting researches?
  • Does there exists a need for developing better and improved theoretical models for conducting accounting researches?

The hypothesis and research questions developed are extracted from the literature review of the research article. The research questions and hypothesis are developed in accordance with the main arguments presented and analyzed in the literature review of the article (Dunmore 2009).

Theoretical Framework

The theoretical framework of the research article is based on analyzing and examining the ontological and epistemological perspectives of positive accounting research. The theoretical argument presented in the paper against the use of positive theory in accounting research is based on its deficiencies to be applied in practice. The explanations provided by the use of positive accounting theory to accounting issues cannot be tested practically. The theory is mainly based on qualitative assumptions and thus the findings obtained from its adoption in accounting research cannot be applied in actual accounting practices. Thus, as such positive accounting research is mainly based on theoretical assumptions that do not provide appropriate understanding of the contemporary issues in accounting (Mourik, 2013). The theory was stated to be based on economics principles and thus it was largely used in accounting researches to achieve practical-based outcomes (Chambers and Dean, 2013). However, the theory is rather regarded to be incapable of maintaining the objectivity of accounting researches. The objectivity of positive accounting theory is analyzed and examined in the given research article through the application of Popper’s falsification criterion (Dunmore 2009).

Popper has proposed the criterion for acceptance or rejection of various theoretical models in scientific basis. The procedure for analyzing a theoretical model on the basis of scientific acceptance is divided into sequence of steps. The first step involves testing the predictions of the theory through the application of empirical evidence. The predictions obtained from the theoretical models needs to be quantitative for their acceptance on scientific basis. The predictions obtained are tested on the criterion of falsification through comparing the predictions obtained from old theories. The acceptance or rejection of the theoretical model is based on outcomes achieved from testing the theoretical models. The theoretical model that fails in the test is rejected and is thus disapproved to provide scientific outcomes. The main argument that is presented in the paper against the use of positive theory in accounting research is that it does not provide any explanation regarding the methods that should be adopted by firms for resolving its accounting issues. The theory is mainly based on the assumptions of the late 1970s and is thus not able to provide guidance to the accountants for selecting a particular accounting method for resolving a respective issue (Dunmore 2009). The theory was regarded by Watts and Zimmerman to be based on scientific evidences but its application on various accounting researches has proved that it is largely theoretical constructed (Watts and Zimmerman, 1990). The theory as advocated by the author in the research article needs to be modified for incorporating the recent developments in the accounting field. Also, there is greater scope for development in accounting theories so that they are able to successfully conduct the scientific based accounting researches (Mattessich, 2013).

 

Significance and Limitations of the Research Article

The research paper is highly significant as it has very well examined the ontology and epistemology of positive research. The research paper has clearly demonstrated the current deficiencies in accounting research and thus ha highlighted the scope of further improvement in accounting research program. The positive accounting theory though has been largely used in accounting researches is not very effective in explaining the scientifically based accounting concepts (Ghnabari et al., 2016). Thus, the author has advocated the need for adoption of better and improved theoretical models that are able to conduct the accounting researches successfully. The theoretical models should be based on logical hypothesis testing so that they are able to maintain the objectivity of accounting researches (Abdel-Kader, 2011). The author has stated that disappointing progress made in positive accounting theory is due to use of ad-hoc quantitative molds that only depicts the relation between two variables (Dunmore 2009).

Thus, the use of such ad-hoc quantitative models does not provide an appropriate explanation of the relationship existing between two variables. Therefore, there is need for development of improved theoretical models in comparison to that of positive accounting that are able to provide practical-based outcomes in accounting researches (Wolk et al., 2012). The author also has emphasized that theoretical models that are constructed to be used in accounting researches should be rigorously tested. This is necessary so that their implications in practical life can be examined adequately before their application in accounting research program (Bovens et al., 2014). The assumptions obtained from theoretical models should be validated through the application of hypotheses testing in order to confirm the accuracy of measurements. Thus, it is essential to explore the applicability of findings obtained from theoretical models in accounting researches before their implementation. Thus, the research article is highly significant as it has explored and illustrates the area of future improvement in accounting research for successfully resolving complex accounting issues of business entities (Dunmore 2009).

The research study though has effectively achieved its aims and objectives but is associated with some limitations. The major limitation of the research study is that it has only a brief literature review section. Thus, the theoretical framework used by the author in achieving the aims of the study is not well presented. The research lacks a sequential flow of information that can make readers confused in gaining an understanding if the major objectives of the research study. The lack of a well-define structure may cause lack of interest in the readers and this pose to be a serious limitations of the given research article. Thus, the author needs to adopt a more comprehensive and logical format in conducting the research for arousing interest in the readers and also achieving successfully its aims and objectives (Dunmore 2009).

 

Conclusion

The major findings of the research article are summarized in the present section of the paper. The research article has proposed that current theoretical models used in accounting research are largely incapable of achieving its scientific aims and objectives. The accounting researches largely incorporate the use of positive accounting theory in attaining the scientific based outcomes of accounting researches. The author in the research article has stated that positive research though was regarded to be based on scientific principle of natural science but its use is limited in accounting researches. This is due to the fact that there is no progress made in the model of positive accounting after its mergence in 1970s. Thus, the model of positive accounting needs to be modified so that it can provide explanation into the reality of accounting practices and concepts. The research article has also highlighted the scope of further improvement in accounting field by adoption of better theoretical models in accounting researches for developing appropriate solution for accounting issues faced by business entities. Thus, the author has very well analyzed various aspects of positive accounting theory and highlighted its various deficiencies that limit its future use in accounting research program. Also, the research opens the future scope of researches that can be carried out in context of examining and analyzing the scientific basis of other theories used in accounting researches.

 

References

Abdel-Kader, M. G. 2011. Review of Management Accounting Research. Springer.

Bovens, M., Goodin, R. E., and Schillemans, T. 2014. The Oxford Handbook of Public Accountability. OUP Oxford.

Chambers, R. J., and Dean, G. W. 2013. Chambers on Accounting: Logic, Law and Ethics. Routledge.

Chatfield, M. and Vangermeersch, R. 2014. The History of Accounting (RLE Accounting): An International Encylopedia. Routledge.

Deegan, C. 2014. Financial Accounting Theory. McGraw-Hill Education Australia.

Dunmore, P.V. 2009. Half a Defence of Positive Accounting Research.

Ghnabari, M. et al. 2016. PAT (Positive Accounting Theory) and Natural Science. International Research Journal of Applied and Basic Sciences 10(2), pp. 177-182.

Mattessich, R. 2013. Reality and Accounting: Ontological Explorations in the Economic and Social Sciences. Routledge.

Mourik, C. 2013. The Routledge Companion to Accounting, Reporting and Regulation. Routledge.

Watts, R. L., and Zimmerman, J. L. 1990. Positive accounting theory: a ten year prospective. The accounting review 65(1), pp. 131-156.  

Wolk, H. I., et al. 2012. Accounting Theory: Conceptual Issues in a Political and Economic Environment. SAGE.  

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