“Half a Defense of Positive Accounting Research” is a study conducted by Paul V Dunmore in 2009 for Massey University, New Zealand. This paper by Dunmore presents positive accounting is a wider intellect of a research aspects which intends to develop causal account of human behaviors with accounting backdrop. The aim of the current critique of the article by Dunmore is to evaluate the significance of this paper in the domain of positive accounting. The current critique begins with a summary of Dunmore’s paper with the emphasis on the core argument, covering its aims and comprehensive results besides the theoretical contributions and arguments. Following the summary, the research questions employed in the study are highlighted to explain how they flowed from the literature review. This is followed by identifying and discussing the theoretical substance of Dunmore’s paper. The literature is then used for discussing the limitations of the methodology and theory employed. Finally, the main points are summarized in the Conclusion section where implications are drawn on the critique.
The paper by Dunmore evaluates the scientific (positive) methodology to accounting research. The article gives a series of epistemological and ontological presumptions that are required minimally for systematic study to be a viable intellectual study, and presents the argument that while such presumptions might ultimately be incorrect, they are neither absurd nor illogical. In fact, scientific research in the field of accounting is a defensible practice. However, if it is defensible, it is also challenging to do effectively (Dunmoer, 2009). The author argues that the qualitative scholars usually employ concepts not as hypotheses that ought to be verified and amended upon, but entirely as a lens via which observational results could be seen. On the other hand, quantitative researchers depend on rational of hypothesis confirmation, which is less difficult than prescription provided by Popper, and assortment it with other attributes that assists in detection of wrong hypothesis less possible (Dunmoer, 2009). Neither quantitative nor qualitative methods of research allow high assurance in putative findings, and erroneous notions are not being rectified as quickly as required. The efficacy of positive accounting study is claimed by Dunmore to be a relic of setting the bar very low.
Dunmore suggested that there is a dire urgency of better theoretical frameworks, i.e. frameworks that are greatly specified and hence immensely exposed, and which are seriously taken as subjects for detailed verification. The researcher states that more elaborative frameworks emerging from empirical investigations. These are not organized to be verifiable, as they are focused on tractability as well as they are not established sufficiently, with notions not defined appropriately to be operationalized (Dunmoer, 2009). In addition to this, the research paper identified that there is a necessity for better measurements so that the academic could be tested rigorously. Notions ought to be operationalized carefully, by identifying proxies for other fascinating notions. Apart from this, the paper argued that there is a necessity for a transferal in emphasis away from the hypothesis testing toward prediction of limits. There is a need to compare confidence intervals for parameters with theoretical estimates, or with parallel measurements from other researches (Dunmoer, 2009).
Moreover, data archives of measurements of critical notions are needed, both those have been made to verify specific paradigms and those that have contributed to the archives. Doing meticulous measurements is an important ability, and the outcomes ought to be recognized as elements of the disciplined research practice. Dunmore also argued that the need for widespread replication is also urgent for validating inferences from hypothesis testing, in order to verify the precision of dimensions along with reconsideration of the boundaries of applicability of research outcomes (Dunmoer, 2009). For qualitative research study, the basic requisite is theoretical models as it considered as assertions regarding the world which need verification to set the parameters of their applicability. This implies that such research works ought to verify contending paradigms against one another, instead of treating only one theory as adequate and unproblematic lens through which to evaluate considered data set.
The theoretical paradigm specified by Dunmore is the positive research program; and essentially in accounting it is named as positive research. This has garnered a conventional value for the past many years even though it reflects several criticisms as well as positivity. It is being employed in accounting at present and because of deficiencies it has resulted in several loopholes due to the expectations. The theoretical framework that underpins Dunmore’s research context speaks largely about examples of scientific research in accounting. The author argues a great deal about Watts and Zimmerman’s theory and draws immensely from Kuhn. Though Watts and Zimmerman (1986, 1990) attain trademark for the term “Positive Accounting Theory” virtually, it will be apparent that the notion of positive research is extensive in comparison to their specific theory. The authors conceptualize that accounting is instigated due to the function of logical self interest amongst entities who communicate through implied or express contracts in different types of companies. This may cover accounting preferences by company managers, along with reporting and pricing decisions by auditors, politicians and regulators and others.
However, other dominions of positive accounting research study do not derive substantially from this framework. The worth centric literature tries to conclude from observed prices and accounting information considered by investors for their decision making , and study the evolution of control mechanisms the companies seek to comprehend what elements result in the adoption of specific mechanisms. Such approaches presume that individuals act logically, but not in the type of aspects that emerge from theory of Positive Accounting (Riahi-Belkaoui, 2004).
Fukuyama (1995) proposed that the basic framework of self-centered, rational human behavior is right nearly 80% of the time; as it is not at all unassailable in terms of quantity, but does carry a sagacity that human behavior is usually sensible however that exceptions do matter. So, certain accounting research reviews human behavior in such settings without presuming logical behavior, like how are judgments made by auditors, how discretion is used by managers in performance assessments, how users are affected by the diverse ways of presenting a company’s accounting information, and how managers stick to a wrong decision despite the feedback displaying their mistake. Such illustrations are not exhaustive at all, but they do demonstrate that the positive research concept is much extensive than Positive Accounting Theory (Antleet al., 2006). Any study aimed at comprehending the causes and nature of specific accounting concept, even if the origins are in irrational facets of anthropological psychology, is eligible as positive accounting research.
However, it was identified from the literature review that not all research works qualify: i.e. scientific accounting research is not similar to accounting research. Interpretive researchers follow some of these explicit questions, questioning every hypothesis underpinning scientific research (Davila and Foster, 2007). Firstly, human agency plus the communally built nature of the roles, relationships, practices and institutions imply that there is no objective existence of the social world liberated of its contestants, and that events in it do not require rational causes. In addition to this, the world cannot be observed except through an individual’s personal experiences and the explanations of other contributors; as there is no objective facts regarding such experience. Due to such epistemological and ontological challenges, any research intending at an impartial comprehension of the grounds of bookkeeping paradigms is pointless. These are the views underpinning the interpretive research. Such type of reality is not insuperable issue (Fogarty and Markarian, 2007). The critics of this approach argue that “human beings are different”, however, that is at present an issue of assertion instead of empirical evidence: no one knows what shared meanings and lived experiences go into the social construct of a wolf pack. There is no such bigger challenge in noticing the social-world of the managing director than that of the wolf: behaviors can be observed, and there is a benefit of being in position to inquire the directors. This research method requires due care, however, the positive method itself is not nullified, unless it is unsuccessful in practice post a just trial (Choiet al., 2006).
Besides this, it is not an issue that positive research does not discover experience and meaning, as its intention is to reconnoiter causation. Varied research streams with distinct goals can co-exist, and it is not a convincing doubt for one field to state that it is unsuccessful in achieving the objective of the other. In the literature review, notion of Kuhn regarding “normal” science seems to apply to positive accounting research more than it applies to customary science. This implies that the evident functional discrepancies are in fact necessary elements of the social-structure of positive accounting research (Brunsand Kaplan, 1987).
Dunmore argued on several points raised in the existing literature. He argues that positive accounting research really contributes to a broader scientific journey, with the specific intention f comprehending human activities and its results in an uncommon setting of multifaceted companies where control systems and specialized information influence a range of decisions. If that is its core role, then issues pertaining to quality affected by poor inferential approaches turn out to be severe concerns.
The main limitation of the research by Dunmore lies in the analysis segment. In current practice, major outputs include statistically significant coefficients, however, it is not feasible to make the interpretations for connecting suspect measurements that are not consistent with theories and sample that are not challenged and whose suitability is not evidenced, rather assumed. It was identified through the study conducted by Wolk, Doddand Rozycki, (2012) that models and tools that are alleged to be employed in the evaluation should be suitable to the study’s objective, otherwise it will negatively impact the dependability of the research because of discrepancies pertaining to the qualitative research and hypothesis. This limitation affected the significance of Dunmore’s study to somewhat extent.
However, barring this limitation, the study proves to be of immense significance for both practical and theoretical purposes. Firstly, Dunmore tries to mend a gap in existing positive accounting research that has been in existence since a long time. By bridging this gap, the researcher provides new insights into the different dimensions of positive accounting research. It was through this study that the importance of extensive replication was identified to verify deductions from testing of hypothesis, to validate the precision of measurements. The findings of this study by Dunmore has opened avenues for further research works in this discipline. The research findings can also be used by scholars to build on their knowledge regarding positive and interpretive researches in accounting settings. Apart from the theoretical contribution that the study makes to the existing body of knowledge, it also has practical significance. Managers in accounting settings can use the research findings to understand human behaviors in their organization. It will also help decision makers to develop better models by working on the prevailing disadvantages in models of positive accounting.
Conclusion
From this literature critique it can be concluded that the article by Dunmore has brought to light a sharp gap between the practice and reality of positive accounting research. The article makes explicit clarification about the fact that development of rigorous theories is a difficult task, and majority of the prominent paradigms will fail when tested efficiently. The research was structured in a clear and concise way and answered all the research questions effectively. It was followed a proper structure with taking into account only the relevant theories. The process of drawing conclusion from the study was also very smooth.
References
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Bruns, J. W. and Kaplan, S. R., 1987. Accounting & Management: Field Study Perspectives. HBU.
Choi, J.-H., Kim, J.-B., Liu, X., Simunic, D. A., 2009. Cross-listing audit fee premiums: Theory and evidence. The Accounting Review 84 (5), 1429–1463.Chua, W. F., 1986. Radical developments in accounting thought. The Accounting Review 61 (4), 601–632.
Davila, A., Foster, G., 2007. Management control systems in early-stage startup companies. The Accounting Review 82 (4), 907–937.
Dunmore, V. P., 2009. Half a Defense of Positive Accounting Research. Massey University.
Fogarty, T. J., Markarian, G., 2007. An empirical assessment of the rise and fall of accounting as an academic discipline.Issues in Accounting Education, 22 (2), 137–161.
Fukuyama, F., 1995. Trust, the Social Virtues and the Creation of Prosperity. Free Press, New York.
Kuhn, T. S., 1970. The Structure of Scientific Revolutions. 2nd Edition. University of Chicago Press, Chicago.
Riahi-Belkaoui, A., 2004. Accounting Theory. Cengage Learning EMEA.
Watta, R. L. and Zimmerman, J., 1990. Positive accounting theory: a ten-year perspective. The Accounting Review, 65(1), 131-156.
Watts, R. and Zimmerman, J., 1986. Positive accounting theory. Prentice Hall.
Wolk, I. H., Dodd, L. J. and Rozycki, J. J., 2012. Accounting Theory: Conceptual Issues in a Political and Economic Environment. SAGE.
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