Describe about the Accounting Theory for Critical Analysis of Research Article.
The research article ‘Half a Defence of Positive Accounting Research’ has emphasised on the contribution of positive accounting in the research program in accounting settings. The use of other theoretical models than positive accounting theory in accounting researches is also examined in the research article. The paper considers positive accounting use in explaining the human behaviour in accounting settings and analyses the ontology and epistemology of using such a program. The major problems encountered by the accountants in the use of positive accounting model are also demonstrated in the research article. The incapability of positive accounting in achieving the scientific objectives is evaluated through the use of a comprehensive theoretical framework in the research article. The main argument thus presented in the research article is ‘to what extent does positive accounting theory is capable for meeting the scientific objectives of accounting research’. The overall discussion held in the research article is based on analysing the importance and deficiencies in positive accounting research (Dunmore, 2009). This essay, in this context, has presented a critical analysis of the research article. The critical analysis is carried out through summarising its main points, identifying its research question, discussing the theoretical framework and examining the significance and limitations of the article.
Summary of the Article
This section summarises the key points generated through the overall discussion held in the research article. The article has stated positive accounting research to be a substantial theoretical model in accounting literature. The theoretical concepts of positive accounting are regarded to be ineffective in the research article for conducting empirical accounting researches. The theoretical model of positive accounting was developed by Watts and Zimmerman in 1970s for carrying experimentation in the field of accounting. Normative accounting theory was used in accounting researches before the development of positive accounting theoretical model. However, the problem with the use of normative theory in accounting settings is that it is not largely effective in achieving experiment based outcomes in accounting (Chatfield and Vangermeersch, 2014). The establishment of positive accounting theory was mainly to attain scientific objectives of accounting research as it is said to be based on natural science phenomena (Rhonheimer, 2000). The main problem in positive accounting is its limitation to attain truly the practical based outcomes of accounting research. The theory of positive accounting though said to be based on scientific phenomena but the outcomes achieved from it are not purely scientific (Dunmore, 2009).
This is the main criticism of positive accounting theory that has questioned its capability in the attainment of experimentation based accounting objectives. Watts and Zimmerman have criticised normative accounting theory as it is unscientific and thus not very helpful in the field of accounting research. However, the identification of weaknesses in positive accounting theoretical model to be based on rhetorical concepts rather than practical has questioned its reliability as well (Burns, and Needles, 2014). The theory of positive accounting was regarded since its establishment largely capable of explaining accounting practices in reality. The identification of the shortcomings in the theory has caused the need for development of better theoretical models that can attain scientific objectives of accounting research (Dunmore, 2009).
Research Question
The research article seeks to address the following research question ‘Does positive accounting theory adequately meets the scientific objectives of accounting research.? In this context, the research study also aims to develop an answer for the following sub-research questions:
The research questions cited above are identified on the basis of discussion held in overall literature review of the research article. The research questions are developed on the basis of the concepts demonstrated in the literature review (Dunmore, 2009).
Theoretical Framework
The theoretical framework of the research article incorporates the views and opinions of different authors on the research topic. The literature review of the article has developed its theoretical framework for analysing and examining the contribution of positive accounting theory in research program. Positive accounting theory has been largely used by the managers of complex business organisations to select an appropriate accounting method that results in maximising their performances. The theory was largely believed since a decade to be based on scientific phenomena and thus highly beneficial for testing accounting predictions. Positive accounting theory is believed by accountants worldwide to provide a scientific explanation of accounting practices. The concepts advocated by theoretical model of positive accounting were viewed as similar to scientific models. The view of the theory guides empirical studies in economics and this has questioned the reliability of positive accounting research. This is because economics theory is used in situation of perfect market state that is not possible in the field of accounting due to involvement of transaction costs. The accounting researches are based on set of generally accepted accounting principles and thus the use of economic based theory does not seem to be appropriate in accounting researches (Ghnabari et al., 2016).
The positive accounting theory though claimed to be based on scientific phenomena was thought to be believed on value judgment. The theory proves to be useful in guiding the decision-making process of financial managers on theoretical grounds but does not seem to be as effective in practical implementation. The theoretical framework of the research article has also emphasised on popper’s falsification criterion for highlighting the deficiencies in the theory (Deegan, 2014). The popper’s falsification criterion incorporates sequences of steps that guides the acceptance or rejection of a particular theoretical model on scientific basis. The first step involves conserving and identifying the testable idea that is followed by statistical testing of quantitative predictions. This is followed by comparing the results obtained with the previous theories for taking final decision on accepting or rejecting a particular theory. Thus, Popper through his falsification criterion has advocated that positive accounting theory need to be based on all the above mentioned parameters for accepting its scientific basis and therefore to be used in accounting settings. The article has demonstrated that though positive accounting theory is developed on the phenomena of science yet it has not provided expected outcomes in the field of accounting research (Dunmore, 2009).
Thus, it can be said from the critical analysis of the theoretical framework of the research article that there is need for adopting better theoretical models in accounting as compared to positive accounting theory. The theory of positive accounting though ha contributed largely to the field of accounting yet it needs some modification in order to explain the accounting practices in reality. Accounting researches mainly involves practical testing of hypothesis developed through the use of statistical approaches and positive research does not seem to be effective in hypothetical testing of accounting predictions (Wickramasinghe and Alawattage, 2012). The selection of particular accounting method in a business organisation must be on the basis of empirical evidences so that it does not negatively impact the firm performance in any way (Bazrafshan and Talebina, 2016). The theory of positive accounting does not seem to be appropriate in providing empirical evidences against the use of a particular accounting practice. This proves to be a major criticism against the theory as can be analysed from the literature review section of the research article. The research article has also proposed through its theoretical framework that positive accounting research should be used in combination of other theoretical models. This is done for successfully carrying out accounting researches by attaining their scientific objectives. The theory of positive accounting alone is not sufficient for explaining the cause and effects relationships in accounting settings and should be used in combination of other scientifically based accounting theories (Dunmore, 2009)..
The research article is highly important in explaining the use of positive accounting theory in broader research program. It also helped in gaining knowledge about the use of other theoretical approaches in accounting researches for successfully achieving their scientific objectives. The contribution of positive approach in accounting researches is also demonstrated through the research article. The research article also helps in developing understanding of scientific and unscientific theory and their use in accounting settings. There are also several limitations of the research article. The major limitation as identified in the theoretical framework of the research article is absence of logical sequential flow of qualitative data. The theoretical framework is very confusing and does not provide an appropriate understanding to the readers about the concept of positive accounting theory. The literature has also not clearly defined the future challenges that exist in the regard of use of positive accounting theory in accounting settings. The problems that exist in the use of positive accounting theory in accounting researches are also not clearly mentioned in the literature review of the article. The author has not properly acknowledged all these limitations in the theoretical framework of the research article (Dunmore, 2009).
In addition to this, the limitation of the research article is that it only incorporates the collection of qualitative data for explaining the research topic. The research methodology adopted by the author in the research work is not appropriate as per the nature of the research topic. The research topic is objective in nature while the methodology adopted has conducted the research study in a subjective manner. The research study has not involved the collection of quantitative data for supporting the theoretical conclusions proposed. The research study should also have incorporated the collection of quantitative data in addition with qualitative for demonstrating practical evidences in support of theoretical findings. The qualitative analysis is done in the research study through the use of secondary literary sources that has presented the views and opinions of different authors about the research topic. The lack of quantitative analyses through the collection of practical data in support of the research topic is lacking in the present study. This may involve statistical testing of hypothesis developed in the research article for enhancing the credibility of the study in the eyes of readers. The lack of quantitative analysis can negatively impact the significance of the article for future researches conducted in this context. This is due to lack of reliability and validity of the research study in the mind of researchers due to absence of practical evidences in support of theoretical findings (Dunmore, 2009).
Conclusion
The overall discussion held in the research article has concluded that positive accounting theory is incapable for achieving the scientific objectives of accounting research. The deficiencies present in the positive accounting limits its implementation in broader research program in accounting settings. Thus, there exists a need for developing better thereical models in accounting that is helpful in achieving its scientific objectives. The researches should emphasise on the establishment of better theoretical approaches in the field of accounting for explaining the accounting practices in reality. This is highly essential as business managers need to select an accurate accounting method for enhancing the firm performance. The improper selection of accounting method on the basis of concepts derived from inappropriate theoretical model can negatively impact a firm performance to a large extent. Thus, the author through the research article has emphasised on the weaknesses present in positive accounting so that better models in the field of accounting can be developed. The accounting researches mainly involve practical testing of accounting predictions for proposing the selection of a particular accounting method for resolving accounting problems. The theoretical models should be developed on scientific basis so that they are appropriate for achieving the practical outcomes of the accounting research.
References
Bazrafshan, M. and Talebina, G. 2016. Challenges Positive Accounting Theory. International Journal of Basic Sciences & Applied Research 5 (2), pp. 119-122.
Burns, J. O. and Needles, B.E. 2014. Accounting Education for the 21st Century: The Global Challenges. Elsevier.
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.
Rhonheimer, M. 2000. Natural Law and Practical Reason: A Thomist View of Moral Autonomy. Fordham Univ Press.
Wickramasinghe, D. and Alawattage, C. 2012. Management Accounting Change: Approaches and Perspectives. Routledge.
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