Discuss about the Accounting Theory for Half Defence.
Paul Dunmore wrote the article “Half Defence of Positive Accounting Research.” The book is about the accounting theory that helps to understand how people behave the way they do. The aim of the author was to introduce the theory into practical daily life (Paul 2009). Most importantly, the article is looking at the significance of the accounting theory in the corporate world and how it adds value to the production efficiency in various entities. The aim of this report is to conduct a critical analysis of the article including the summary and critical review of the study process. The aim is to identify the weaknesses of the article and capitalize on the strengths.
The main objective of the article is to provide critical analysis on the application of the accounting theory on the daily lives of the people and how it affects the behavior of the people. According to the article, it is not possible to predict the financial and capital markets, and this means that people behave by the current changes in the business environment (Choi et al. 2009). The accounting theory, in this case, highlights the significance of predicting individual and market behavior regarding the market. The author was much concerned about positive accounting theory as the theory that helps to make effective predictions in the business environment.
Further, the positive accounting theory argues that economists are not so interested to find out what is to be done but the factors behind the happening of a certain event. However, the management of an organization must take appropriate measures to determine the factors that affect the operations of the business (Dahmash et al. 2009). It is because the management must take appropriate measures to compete effectively in the competitive market. As such, the author argues that positive accounting theory is necessary for understanding the factors behind certain events so as to take measures to manage the issues.
Besides, the author argues that most investors use the positive accounting theory to make decisions regarding pricing. For instance, the investors are keen to understand the factors that influence the behavior of the consumers and formulate strategies and systems that can help to attract and retain the consumers (Davila and Foster 2007). This is because the theory argues that consumers are rational and they make rational decisions. In this regard, it is necessary to understand the relationship customer behavior and the market factors. In this way, one can link the accounting behavior and rational behavior thus improving the quality of decisions management makes that influence the success of their business.
Paul Dunmore tries to explore the reasons why people behave the way they do. However, previous research has not managed to develop the causal theory that clearly explains this concept about human behavior. The positive theory helps to understand the accounting issues and how it influences the behavior of individuals in the society (Hay et al. 2006). Despite the fact that many scholars have tried to develop the accounting their help to understand the human behavior, they fail to come up with clear conclusions because it is hard to test the theoretical models they use in their studies. Other factors that affect the reliability of the studies include lack of focus in understanding the numerical values, but instead, they focus on using theories as lenses to evaluate the qualitative data. However, to some extent, the positive theory can help to understand some prior knowledge about the relationship between changes in the financial markets and the behavior of individuals.
The article argues that the previous scholars have tried to explain the concept of human behavior. However, they use models that cannot be tested scientifically to prove the findings. It means that they must develop subjects for detailed testing to provide appropriate answers to the issues surrounding the accounting theory (Humphrey 2008). The use of a quantitative method for doing the study is useful, but they are reduced to just statements that cannot provide a clear relationship between the variables. Also, Paul Dunmore argues that there is need to conduct a more vigorous research study that can be tested to determine the reliability of the findings instead of providing mere analysis. It means that there is need to conduct a scientific study to determine the causal and relationship effect.
The thesis of the research report is that there is a direct relationship between cause and effect in the practical world. The researcher selected this topic because it helps to promote organization throughout the study with the aim of achieving the goals and objectives. Besides, the thesis is significant because it helps to guide the researcher throughout the study with the aim of finding the answers to the gaps identified in the previous research (Hay et al. 2006). In this regard, the investigator managed to conduct the study systematically from the introduction to the literature review. For example, most of the interpretive researcher use open questions, and this makes it difficult to conduct a scientific study.
In the literature review, the researcher managed to identify that human agency is not based on the social constructive in nature. The social nature of the world according to the author determines the roles and relationships people engage taking into account the cause and effect nature. However, the author was successful to conduct this research with the help of the thesis statement (Francis 2006). Based on the research questions, the author asserts that the only ways to observe the world are through own experiences and descriptions as well as engaging various participants thus improving the results.
The interpretive research program underlies these views but helps to understand the relationship amongst individuals. Human beings are different, and they have different behaviors when it comes to rationality. Because of the differences in perception, it is not easy to understand the experience (Hannam 2009). However, the accounting theory argues that people make decisions based on the cause and effect. In simple terms, the researcher has tried to explore the concept of human behavior according to accountancy theory, but this is made possible because of the thesis developed. Therefore, the thesis guided the researcher throughout the study and in the process remained focused and avoids deviating from the aim of the study.
In the accounting industry, most accountants face various issues that affect their operations. Previously, scholars have conducted extensive research regarding the best accounting techniques, but they have not managed to develop the most effective strategies that enhance the business operations. For example, the positivity research program is applied in the accounting sector to enhance the operations of the accountants (Gonthier-Besacier and Schatt 2007). However, the program is not appropriate because it faces many challenges. The scholars who use the technique according to author encounter problems such as casual construction models that are not tested scientifically and reliance of the hypothesis that is not tested. In this effect, more research is required to improve the accounting standards.
It is also important to understand that the previous accounting theories have four basic assumptions that affect their effectiveness. The first assumption is the economic assumption that states that the operations of the business are different from the activities of the owners of the business. In this regard, the accountants do not assume that the business does not face any significant risk such as dissolution (Francis 2006). However, this is a wrong assumption because any business is prone to various risks. Finally, the periodicity assumption argues that the business is broken into various fiscal periods taking place in various fiscal periods. In this effect, the assumptions affect the accounting standards because they do not meet the changes in the business environment.
Considering the assumptions of the theories, research is required in the accounting sector to develop better policies that look into the cause and effect relationship. As such, the scholar will have to deeply research more about accounting standards and how they influence the decision-making process among the managers (Fogarty and Markarian 2007). In this regard, the accounting theory helps to understand the issues well by identifying the weaknesses and address the loopholes in the study. Therefore, this research was required because it helps to understand the cause and effect relationship effectively.
The first significance of the article is that it helps to understand how people make decisions that affect their accounting strategies. After reading the article, most people can understand the relationship between the human behavior and accounting settings. As such, the author has improved the thinking of the individuals and how they make decisions (Berg 2008). Besides, the article has improved the research methods. One can realize that the author was organized in doing the research starting from the introduction, review of the literature and methodology used to conduct the study. Learners can also understand how research process is conducted. Therefore, the article is significant because it helps to promote the learning process (Kumar 2010). However, the article also raises questions regarding further research such as how to conduct research using scientific methods and the article does not address a specific issue in the accounting theory.
On the other hand, research limitations, in this case, can affect the research reliability. In the first place, the author did not indicate how the author collected data from the respondents. For any research to be successful, it is necessary to collect primary data as well as secondary data that help to find answers to the research questions effectively (DeMarrais and Stephen 2010). Therefore, the researcher failed to convince the readers about the process of conducting the study and this limits the reliability of the research findings. Further, the researcher has drawn conclusions that are not critical and do not reflect on the methodology used hence one can question the results.
Another limitation one can identify from the article is that the researcher did not indicate the prior studies regarding the research topic (Eriksson and Kovalainen 2008). The researcher has tried to explore the issue of accounting theory but has not quoted the previous studies about the same topic and the weaknesses. As such, it is difficult to make comparisons to understand which study gives the best results as well as improvement from the previous studies (Collins 2010). Finally, the article does not indicate the measure the investigator used to collect and analyze the results. The ability to interpret the results successfully depends on the measure used. In future, therefore, the researcher will have to give details of the research process.
These limitations affect the significance of the article because the readers want to understand how the author conducted the study and the methodology used. This is because the methods used to collect and analyze data influence the reliability of the findings (Bischoping 2009). As such, the limitations in this article affected its significance because some scholars cannot buy its ideas. The findings must align with the research method failure to which scholars can dispute the results. However, the author tried to provide content analysis and using scholarly information but this is not enough in conducting the study and answer the research question successfully.
Conclusion
“Half Defence of Positive Accounting Research” article was written by Paul Dunmore. The aim of the study is to develop explanations that help to explain causal and effect relationship and how they affect the human behavior about accounting settings. The article helps to understand the effectiveness of the positivist research program. However, the limitations identified in the study include the inability to provide appropriate data, lack of information and data from the previous about the same topic and the author did not provide the measuring method used to analyze the collected data.
References
Berg, B. L 2008, Qualitative research methods for the social sciences. 7th ed. Boston, MA: Allyn & Bacon.
Bischoping, K 2009, Review of Social research methods: Qualitative and quantitative approaches, SAGE Publications Ltd.
Collins, H 2010, Creative Research: The theory and practice of research for the creative industries. Lausanne: AVA Academia.
DeMarrais, K and Stephen D. L 2010, Foundations for research: Methods of inquiry in education and the social sciences. Mahwah, NJ: L. Erlbaum Associates.
Paul, D 2009, Half Defence of Positive Accounting Research. Massey University: New Zealand.
Choi, J.-H., Kim, J.-B., Liu, X and Simunic, D. A 2009, Cross-listing audit fee premiums: Theory and evidence. The Accounting Review Vol. 84, No. 5, pp. 1429-1463.
Dahmash, F. N., Durand, R and Watson, J 2009, The value relevance and re- liability of reported goodwill and identifiable intangible assets. The British Accounting Review Vol. 41, No. 2, pp. 120-137.
Davila, A and Foster, G 2007, Management control systems in early-stage startup companies. The Accounting Review Vol. 82, No. 4, pp. 907-937.
Eriksson, P and Kovalainen, A 2008, Qualitative Methods in Business Research, 1st ed London: SAGE Publications Ltd.
Fogarty, T. J and Markarian, G 2007, An empirical assessment of the rise and fall of accounting as an academic discipline. Issues in Accounting Education Vol. 22, No. 2, pp. 137-161.
Francis, J. R 2006, Are auditors compromised by non audit services? Assessing the evidence. Contemporary Accounting Research Vol. 23, No. 3, pp. 747-760.
Gonthier-Besacier, N, and Schatt, A 2007, Determinants of audit fees for French quoted firms. Managerial Auditing Journal Vol. 22, No. 2, pp. 139-160.
Hannam, J 2009, God’s Philosophers: How the Medieval World Laid the Foundations of Modern Science. Icon, London.
Hay, D. C., Knechel, W. R and Wong, N 2006, Audit fees: A meta-analysis of the elect of supply and demand attributes. Contemporary Accounting Research Vol. 23, No. 1, pp. 141-191.
Humphrey, C 2008, Auditing research: A review across the disciplinary divide. Accounting, Auditing & Accountability Journal Vol. 21, No. 2, pp. 170-203.
Kumar, R 2010, Research Methodology: A Step-by-Step Guide for Beginners. London: Sage.
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