This paper’s key theme is to examine the application of positive approach for the studies, which are conducting in the accounting discipline. For this purpose, article, which is written by Paul V Dunmore i.e. “Half a Defence of Positive Accounting Research”, would be examined critically to identify the areas of strengths and weaknesses and their implications for the field of accounting research. In this paper, the main arguments are based on the process of applying positive accounting approach in studying the real events of the accounting field. Positive approach of understanding an accounting event will be examined critically in this paper to understand its usefulness in terms of conducting accounting research. For analyzing the selected article systematically, the structure of this paper includes an overview of paper, summary, research question, theoretical framework and significance and drawbacks of article is presented. At the end, conclusion is included to depict the key point of paper.
The chosen article for analysis includes a critical examination over the effectiveness of positive approach in the accounting field. The broad sense of positive approach is taken into account through understanding it as research program in which researcher is aimed to explain conditions/circumstances or causes due to which a particular human behaviour in the accounting field are developed. By using the literature review approach, existed literature in relation to the positive accounting research is analyzed to understand the usefulness and drawbacks of positive accounting theory (PAT). The application of PAT in the accounting research is examined in this article in context of the two distinct branches of knowledge development such as ontology and epistemology. In this article, the way of explaining human (auditors, managers and accountants) behaviour in the research programs through the application of PAT is analyzed (Dunmore, 2010). The way a firm chooses accounting policies is studied under the positive accounting research.
For determining the areas of efficiencies and deficiencies, the studies of accounting and auditing field are included and examined carefully. This examination is focused on analyzing the process of performing accounting research through PAT. Its implication on the accuracy of a research project is also investigated. For examining the application of PAT in the accounting field, theoretical models and judgment for the hypothesis testing are analyzed critically. The discussion mainly focuses on determining the gap between expected and actual performance of PAT in the field of accounting. The significance of “normal science” perspective is indicated in this research to enhance the accuracy in the way of understating human behaviour is investigated through positive accounting research. Due to the insignificance of positive approach in terms of analyzing human behaviour on the scientific manner, a need of improving in the way of conducting positive accounting approach is indicated in this article (Dunmore, 2010).
Through the analysis of this article, it is determined that researcher has employed inductive approach rather deductive approach as in this research question is used to guide the process of investigation. A study with the inductive approach starts with an analysis of research questions. In this study, inductive approach is employed researcher (Bryman, 2015). It an exploratory study in which researcher’s key focus is on answering the two key questions, which are depicted below:
The above questions are answered in this research and each has considerable value in terms of improving the relevancy, accuracy and reliability of research, which are conducted based on the positive accounting approach. These research questions are contributed well in analyzing the process of developing knowledge in the accounting research based on the positive approach. This would be helpful to understand the areas of positive research in which improvement are critical to conduct scientific studies. It is valuable to improve the studies which are conducted to examine human behaviour in the accounting principles and standards. The questions are quite effective to enhance the accuracy of the accounting research, which are conducted through the use of positive approach (Wilson, 2014).
In this article, the included review of literature successfully is flowed the value of developed research question. Through using an inductive reasoning approach, the research questions are answered with sufficient explanation by using range of studies from the accounting and auditing field. Different examples are quoted in this article from the existed literature to explain the process of applying positive approach in accounting field and its deficiencies. The inclusion of examples from previous studies ensures the presence of reliable and accurate data to present the explanation over the selected research issue (Creswell, 2013).
This article’s literature review is successful presented several examples to either support or argue a perspective related to the process of positive accounting approach. The evidences are presented for examining models, framework and theories related to the positive approach in the accounting discipline. A strong theoretical framework is successfully presented in the article through the literature review. It has helped researcher to present sufficient arguments to develop the answer of the research questions and to realize identified value from them (Cohen et al., 2013). Hence, the literature review of this article is quite significant due to its contribution in presenting arguments for the existing deficiencies in the process of implementing positive approach in the accounting field and providing informed suggestions for the improvements in positive accounting research.
Theoretical substance of the article is one of the key elements of the research. In this, different theories or models are discussed by the researcher to answer the research question properly. Positive Accounting Theory (PAT) is key theory of this research on which most of arguments are developed in this article. It is a theory to predict the choice of managers for the selection of accounting standards and policies. This theory predicts possible choice of firms for the accounting policies and their reasons. It attempts to explain the influence of self-interest (opportunistic behaviour) of managers on the selection of accounting policies. Accounting policies can be used by managers to reduce financial cost (Cooper, 2015). The managers are economic rationale decision-maker due to which they are likely to use accounting policies for presenting an organization efficiently.
PAT is significant to understand and analyze real event in which accounting transactions are recorded and presented through employing specific accounting standards and principles. PAT attempts to understand and explain the reasons due to which certain accounting standards has chosen for the purpose of financial reporting. It is mainly concerned with the qualitative characteristics of the financial reporting such as reliability, relevancy and comparability, which is likely to influence by human behaviour (Christensen et al., 2016).
The other key theoretical perspective includes Kuhn’s theory of normal science. In this article, this theory is discussed and presented by highlight its elements. “Normal Science” theory includes in this article to make the positive approach in accounting more scientific by indicating the significance of general paradigm. Kuhn’ perspective of normal science highlights puzzle-solving nature of scientific enquiry in which researchers should not challenge the previously developed assumptions (Kindi and Arabatzis, 2013). It is because it suggests researcher to use puzzle-solving approach for conducting a scientific study. For highlighting limitations of positive approach in the accounting field, normal science theory is used in this article. On this basis, the improvement areas in the process of implementing positive approach are highlighted (Dunmore, 2010).
Falsifiability theory of Karl Popper is also identified as an important theoretical perspective in this article. This theory includes due to its significance in examining the scientific nature of the theory. Falsifiability criterion helps to examine a theory on basis of whether it is feasible to found theory’s falsifiability in form of principles. Through this, the theory of implementing positive approach in accounting is examined. If it is possible to found falsifiability in form of principle than it can be said a scientific theory. These criteria enable to explain a theory in quantifiable manner and to use logical way of examination. Observation and knowledge based principles and assumptions of a theory can be influenced by the internal and external aspects of a situation, which may lead to decrease the reliability of developed theory and its scientific nature (Popper, 2014). The process of examining and predicting managers’ choice for the accounting standards and policies for the purpose of financial reporting can be influenced by the personal experiences and prejudice.
In addition to this, audit-fee concept is also included in this study to examine the application of positive approach in the auditing field. By including this, the relationship of audit complexity and accuracy with the fee is explained in this article. Causal theory is also included to show the impact of religion in developing experiences and shaping human behaviour and personality in the accounting field (Dunmore, 2010). This theory perceives importance of learning in translating experiences into behaviour.
The critical analysis of the selected article has helped to recognize and highlight strong and weak areas of the conducted study, which is aimed to analyze the application of positive approach in the accounting research. This article’s key strength is its structure, which systematically presents the arguments of this study. The theories, which are used in this article, are presented systematically. It plays critical role in answering the each developed question carefully and to develop informed findings (Creswell, 2013). Through the structure, researcher has developed informed arguments on the basis of theories and this contributed in developing informed results regarding the process of implementing positive approach in the accounting studies, which causes increase in the usefulness of this article’s content. At the end, suggestions and conclusions are included, which completes the investigation of this article and increase values by offering ways to improve positive approach in the accounting field (Dunmore, 2010).
But, the inclusion of range of theories in this article to present arguments contributes in making the outcomes more theoretical. The research outcomes based on the theories presents lack of practicability. This is likely to decrease the value of this article’s outcomes. On the other hand, method of data collection is quite significant to support the selected inductive approach, which requires in-depth understanding of a phenomenon. Secondary method of data collection has enabled the researcher to include range of researcher’s opinion and theories for justifying the presented arguments in the logical manner. It influences the validity and reliability of article’s content in the positive manner (Collins, 2010). This data collection method is also allowed researcher to include a strong theoretical framework in this study. However, the inclusion of different theories for developing justifiable arguments indicates the significant limitation. The limitations of the included theories are not highlighted and considered by the researcher. It is likely to affect the arguments, which are developed on the basis of these theories (Gerrish and Lathlean, 2015).
At the same time, suggestions are offered in this research at the end of the article to improve the application of positive approach in the accounting studies. These suggestions lack practicability aspects and due to this, the value of the article can be affected in the significant manner (Dunmore, 2010). It does not include method to apply the suggestion in the practical scenario of research.
Conclusions:
On the basis of critical analysis of selected article, it can be said that the positive approach in the accounting context can be understood properly through this article’s critiques. The researcher included in-depth and important discussion regarding the associated theories and models such as audit-fee, Kuhn’s normal science, Falsifiability theory of Karl Popper and causal theory. On the basis of these theories, several deficiencies in the application of positive approach in the accounting field such as overreliance the on non-quantifiable aspects, development of theoretical framework and models of testing hypotheses are identified. Some weaknesses in the research’ methodology part is likely to influence the research’s value in adverse manner.
References:
Bryman, A. (2015) Social research methods. UK: Oxford university press.
Christensen, H.B., Nikolaev, V.V. and Wittenberg?Moerman, R. (2016) Accounting information in financial contracting: The incomplete contract theory perspective. Journal of Accounting Research, 54(2), pp.397-435.
Cohen, L., Manion, L. and Morrison, K. (2013) Research methods in education. UK: Routledge.
Collins, H. (2010) Creative research: the theory and practice of research for the creative industries. USA: Ava Publishing.
Cooper, C. (2015) Accounting for the fictitious: A Marxist contribution to understanding accounting’s roles in the financial crisis. Critical Perspectives on Accounting, 30, pp.63-82.
Dunmore, P.V. (2010) Half a Defence of Positive Accounting Research. [Online]. Available at: https://www.massey.ac.nz/~pvdunmor/HalfaDefence.pdf (Accessed: 24 April 2017).
Gerrish, K. and Lathlean, A. (2015) The research process in nursing. USA: John Wiley & Sons.
Kindi, V. and Arabatzis, T. eds. (2013) Kuhn’s the structure of scientific revolutions revisited. UK: Routledge.
Popper, K. (2014) Conjectures and Refutations: The Growth of Scientific Knowledge. UK: Routledge.
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