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Study Of Positive Accounting Theory

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Question:

Discuss About the Study Of Positive Accounting Theory An Explanation Of Human Behaviour In An Accounting Setting.

 

 

Answer:

Introduction

The present report deals with the study of Positive Accounting Theory in a broader sense of research program whose main objective is developing providing an explanation of human behaviour in an accounting setting.  It evolves detail analysis of “Half a Defence of Positive Accounting Research”written by Paul V Dunmore for Massey University, Wellington, New Zealand.  The report initiates with the overview of specified article, and main focus has been made on the particular discussion of the article. For the same research questions and theoretical framework has been provided so that literature review could be understood in more appropriate manner. Through analysing the literature review implications and constraints would be assessed more appropriately to depict an appropriate conclusion.

Overview Of Article

Positive accounting theory can be said as one of the clear concepts of positive research which is one of a broader concept in comparison to a particular theory. It is a part of a wider intellectual project proposed to assess the cause and effects relationship in the world under study. The main emphasise is on the critical segments of academic accounting research which focus on assessing and formulating actual practices in accounting. For analysing the importance and deficiencies of positive accounting, the broader part i.e. ontological and epistemological assumption. The illustrative paper has been discussed from many areas but emphasise has been made predominately in auditing literature. It is in contrast with the normative accounting which is focused on the description of optimal accounting standards. Further, the methods of improvising the approach for existing accounting method which might be followed by the organisation have also been discussed.

 

 

An attempt is made by Paul to explain the concept of the disciplinary matrix which suggested positive research as a paradigm as the best tool for solving accepted puzzles rather than receiving solution from social or intellectual contribution.  An important argument provided in the article is more appropriate theoretical models who are having a characteristic like highly specified, vulnerable, etc. are the basic requirement of positive accounting.  Ad hoc quantitative models have been specified as the reason behind inappropriate progress in positive accounting as they limit the probable sign of a relationship between two variables. This is only because of their unsuitable structure due to which they convert as in operational.

It is necessary for accounting concepts to be operationalized with major care for the theories which are beneficial and significant for business. The same requires effective measures for evaluating theoretical models on a serious basis. It is necessary that policy formers and developers require emphasising on functionality so that a more appropriate linear relationship could be developed with the existing accounting concepts. Nature which is socially construed is not the actual problem, but termite mounds and wolf packs are tolerable amenable to scientific study. It is being argued by interpretive critiques that there are different kinds of human but the main issue which requires assertion is empirical evidence rather than shared meanings go into social constructions of a wolf pack. The article ends up with the argument relating to transference to correct method of testing hypothesis towards an approximation of parameters. The same has been assessed through parameters of confidence intervals or by comparing evaluation of other relevant studies. The requirement of broadening replication has been expressed for concluding appropriate conclusion of hypothesis testing. It will provide support for the accuracy of evaluation and discover the existing constraints of research.

Research Queries

The present article is mainly emphasised on the deep analysis of positive accounting research, and the specified questions are prescribed below:

  • What are the necessities for an unbeaten positive research program?
    • Which are the highly specified and vulnerable theoretical models that are designed and tested accurately to the extent possible?
    • How to develop analytical models?
    • The need behind emphasising on measurement rather than testing?
    • What are the distinctive motives behind replication and their explanation?
 

Theoretical Framework

The report presents the analysis of accounting phenomena which is caused due to the operation of self- interest within parties who interact in various kinds of organisation. Focus have been given the constraints relating to positive accounting research   review reveals severe drawbacks in the performance of positive accounting research which does not allow to provide the  effective evolvement  in broad-based projects. The basic necessity of abstract framework is assessing for the purpose of limiting their research. It has been provided that the other areas of accounting do not support this theoretical model. An attempt has been made to infer the observed prices which have been used by accounting information investor for the purpose of enhancing the growth of development of controlling system and the variants on the basis of a particular system that leads to its adoption.

 The existence of discussion relating to the involvement of discussion relating to research involves quantitative or qualitative data. The essence which has been adopted by a scientist for the purpose of research science evolves development of preliminary ideas. A formal theory is developed by the after accomplishing a testable prediction which is dependable on reasonable empirical evidence Quantum of predictions is dependable on percentile of susceptible falsified ideas. New theories are analysed and predicted in case different theories are ascertained after analysing the old theories. Analysis of old theories and assessment of new theories in case falsified results are received after application of old theories is being done again and again. According to the study of Popper new theories suggest observed regularities but  the same are not proved inductively by those observations Careful observation distinguishes a creative idea from other ideas It has argued many times that falsification is inoperable as a variety of assumptions goes into falsifiability criteria.   

Better measurement tools are the utmost requirement for making   an accounting research successful. The theories must not be affected by the variants of environment vulnerability. Few successful research has been provided as an example; main criticism provided in the article. Some good research has been considered for illustrating the examples by Paul V Dunmore are has been specified:

  • The conclusions of the theory are based on an assumption that shareholders and management have their self-interest with the main objective of increasing their own wealth without assessing its negative aspects.
  • No specification relating to predictions about the overall impact has been specified through Positive accounting, and due to same, the main objective of positive accounting does not accomplish.
  • Positive Theory accounting mainly emphasis on the clarification of what people might actually act through ignoring the actual requirement which needed to be an accomplishment.

According to the views of  Kuhn,  science is basically accordance  a form of play. The one who does not subscribe to paradigm cannot be a part of the scientific community, same in the case as a chess player who assumed the rules should be different would not find another person to play in accordance with his own rules. He has described Normal Science in a disciplinary area can be said as a combination of attitude, beliefs and practices which are accepted so that the members of that group for solving a variety of related puzzles. The reason behind same is the inclusion of behavioural pattern in positive accounting. He argues that the model will be replaced when the same could not support the concept of normal science and occurs in the form of revolutionary crises or other forms.

 


The main factors of a communal system comprising positive accounting research can be understood through the concept of normal science. The motive of this social system is to present question relating to the manner in which human behaves while doing the research and assist in providing a solution with fewer efforts. It is not necessary that social system relates to formulated information relating to human behaviour in regard to accounting. Stability does  remain in doubt for a , but the same do not resemble that new system addresses  longer period stem may not necessarily add to our already formulated information related to human behaviour in the context of accounting.  The stability of the social system remains in doubt for an extended period of time. But this does not imply adoption of a new system every time a new crisis is addressed in the new research. Normal science is specified as enlighten practised by a particular group required to be adjusted accordingly to the requirement of the group in order to sort out the queries relating to accounting research. It also emphasise on the significance of hypothesis testing instead of just assessing of hypothesis..

The concept of positive accounting remains concerned with building or testing models. However,  the perspective relating to the point of view for those research is having major importance and focused with building or testing model have also been presented. Positive accounting has been specified as scientific research in economics and accounting. Even other areas of positive accounting have not been created by taking the base of these theoretical models. The importance of literature model makes efforts to derive their figures which have been used as a base by the users for the purpose of the decision. However for the purpose of research is to create controlling systems which assess to develop an understanding of the factors which cause adoption of some theories (Dahmash, Durand and Watson, 2009).  The primary model of balanced self-focus human behaviour is focused mainly on assessing the same in an appropriate manner. As per Watts and Zimmerman, the value literature makes efforts for inferring the prices what accounting researcher applied in their decision and is developing a control system for growing the organisation for assessing the variants which are the base before selecting of a particular system. (Francis, 2006).  These approaches work on the assumption that human behaviour o a rational basis and not in the sort of games which arise a form of Positive accounting theory.

Evaluation of the performance is also done o the basis of presupposing human act in some of the theories (Gibbins, 1984). Any research which aims at analysing the nature and reasons for a particular accounting phenomenon, even in the case it lies in non-rational aspects of human psychology, qualifies as positive scientific accounting research. These different illustrations are not comprehensive when taken as total, but an effort has been made to illustrate the entire positive accounting research program in a wider concept in comparison of accounting theory.

 

Significance And Constraints

The article has provided appropriate explanation relating to understanding the concept of human behaviour in positive accounting. The reason behind the same is the inimitable setting which has been applied in the research for specific criteria of human behaviour. It can be applied as a base for policy developers and formers for making other theories in the more appropriate manner in comparison to existing theories of positive accounting. Presently, empirical questions exist which have not been answered as no comprehensive models are present for the same. Problems in the case of technical assumptions are more appropriately recognised by the researchers and might be tested by the same.  According to the study  of Flick (2015), tools and theories which have been applied for the purpose of analysis must be more appropriate to the objective of study else the same will have a negative impact on their ability due to inadequacies related to hypothesis and qualitative research.

In accordance with the study of Creswell, (2013) constraints and advantages of the article have not been appropriately explained from the point of view of a reader. The limitation has its impact on the validity of conclusions derived from the theories available in the researc and thus the same reason it cannot be considered for future researchers. Conclusions provided by Paul V Dunmore in the article are feasible as justifications and reasoning have been provided for the same.

Conclusion

It can be concluded that the article has evaluated the ontology and epistemology of positive accounting research and analysed the present practices of accounting research which have been a necessity for making an accounting research successful. However, it can be analysed that a need for better accounting theories is required which are highly specified and vulnerable so that the same can be applied in subjects for detail testing. The present research article specifies the need of broadening replication so that appropriate conclusions can be withdrawn from hypothesis testing. Hence, this aspect will be applied for evaluation of accurate measurement which can be used by the researcher for the purpose of removing the constraints in research findings.

 

References

Books and Journals

Creswell, J.W., 2013. Qualitative inquiry and research design: Choosing among five approaches. Sage.

Dahmash, F. N., Durand, R. B., Watson, J. 2009. The value relevance and reliability of reported goodwill and identifiable intangible assets. The British Accounting Review 41 (2), 120 – 137.

Flick, U., 2015. Introducing research methodology: A beginner's guide to doing a research project. Sage.

Francis, J. R., 2006. Are auditors compromised by nonaudit services? Assessing the evidence. Contemporary Accounting Research 23 (3), 747 – 760.

Gibbins, M., 1984. Propositions about the psychology of professional judgment in public accounting. Journal of Accounting Research.22 (1), 103{125.

Kuhn, T. S., 1970. The Structure of Scientific Revolutions, 2nd Edition. University of Chicago Press, Chicago.

Watts, R. L., Zimmerman, J. L., 1990. Positive accounting theory: A ten year perspective. The Accounting Review 65 (1), 131-156.

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