Summary
The paper is based on the concept Positive accounting Theory. Positive accounting theory which is also known as PAT is a general term for the theories regarding behaviour of accountants. The term ‘Positive Accounting theory’ is given by Watts and Zimmerman and human behaviour in accounting settings has been explained in it. Critique of PAT is been done in this paper with an aim to identify and discuss the theory and the key issues in the article given by Paul V Dunmore titled ‘Half a defence of Positive Accounting Research’. In this paper, theories used and concepts used by accounting researchers are actually reliable or not has been tested in this article. Various tools, tetchiness and analysis theories has been used to critique this paper (Scrimnger & Musvoto, 2011). The strength and weakness of the article will be discussed and the paper will be completed following a structure which includes summary, a research question, theoretical framework and significance with the limitations of the article. The paper ends with a conclusion.
This article focuses on the positive approach of accounting. The article contains the deeper analysis of Positive accounting theory and the question is raised on the scientific status of the theory. Many flaws in the theory has been pointed out which questions the usefulness of the theory. The theory suggests that the managers are considered more for their organisations and that is why they take steps which derive more benefits to the organisation rather than to the shareholders. Casual explanations of human behaviour have been explained in the paper. Ontology and epistemology of positive accounting has also been examined in the paper. The theory is powerful but in practice, it is weaker and has shown limitations. The article has also involved illustrations from the good papers to explain the concept properly. It is seen that the theory at present is not capable of achieving the scientific objectives (Beja & Palma, 2008). In this article, evaluation of current accounting theories has been done so that analyse effectiveness of current accounting theories. In this article, various measures like testing of theoretical models in terms of its casual construction have been done. Analysis section of this article, evaluate use of hypothesis testing in the accounting research made by researchers in the decision making process. Theoretical arguments of this article suggests that in accounting there is still positive research is going on and researchers has come on the conclusion that positive research is incapable to achieve scientific objectives.
There are various decisions in the business operations and in research activities that are required to be answered so as to answer problems or issues. Whether current accounting framework or current accounting research is able to sole the issue or problems of users of accounting models, is the question of this article (Brink, Glasscock & Wier, 2012).
This question is required to answer whether there is only quantitative models that are used for positive accounting research or there are some qualitative methods also that lead to better decision making results.
Theoretical Framework
Another question arise that need to be answered is of whether there are enough or adequate techniques that can be used or applied for testing theoretical models. Therefore main question here arise is related to adequacy of measurement techniques for testing theoretical models in accounting research framework (Waymire, 2012).
Theoretical framework can be defined as the evaluation of different concepts which are interrelated to each other. Theoretical framework is like theories that can be used to prove something in any filed whether in accounting research or in any other research. In other words, theoretical substance is the theory or satiation where substance or logic behind the procedure over rules defined theories or legal aspect of the situation. In this article, various theories of which theoretical substance has been defined and test has been demonstrated. In this article various theoretical frameworks has been used and they are as follows:
In this article human agency theory has been examined and tested in terms of applying in the article. Human agency theory is used to identify and define roles, responsibilities and practices those humans follow is used to build societies. In other words, society is nothing without human interaction and cannot perform without humans. In this article analysis of use of theories has been done i.e. whether relevant and popular theories has provided adequate base for testing current system of accounting.
In order to understand, inefficiency of theories or proven theories analysis of issues that were associated with Pioneer 10 and 11 were described. There are many theories whose main idea or substance is not relevant in modern day logics. In this article, many theories related to testing quantities aspects has been considered. In auditing assertions are used to conduct and analyse better in term of theories that are applied during auditing. Assertions can be defined as the statement of facts that became base in auditing process. Assertions are based on personal experience and expertise therefore this situation lends using assertions or auditing theory based on assertions in the ambit of scientific research (Kothari & Skinner, 2010). Another theoretical framework that is not worked well in researchers or positive quantitative accounting researchers is of testing of hypothesis. Testing of hypothesis is one of the biggest bases in accounting research and biased on hypothesis testing, many researchers has concluded its point. Since in test of hypothesis, researchers uses probability data to test the figures or analyse situations in the given time frame. In these tests, only quantitative data being used and consideration to qualitative data is not provided. Quantitative data can be some miss-leading as its nature is ever changing therefore trust on quantitative data is not possible (Nelson, Ponsian & Musa, 2011). This is the main down fall of test of hypothesis against the logics that can be established from naked eyes.
Use the literature to discuss the limitations of the theory and methodology used:
Positive accounting theory has been examined and analysed in the present article so as to conclude its reliability and usability in accounting researches. Positive accounting is the branch in academic research that is used to develop and implement accepting facts in accounting practices. Positive accounting theory is limited in terms of explaining and analysing qualitative or theoretical aspects of accounting framework and accounting theories. Positive accounting theory, as discussed in the present article, defines actions and reactions of accounting firms or researchers in accounting only (Clement et al., 2014). Positive accounting theory does not undertaken quantitative aspect of accounting research that are related to or based on many concepts. Under positive accounting theory, understanding or explanation of various concepts related to accounting research and accounting practices undertaken around the world is defined. Positive accounting theory does not examine application of concepts or use of concepts but under current theory post-mortem of accounting concepts takes place (Komarova, Haws & Cheema, 2010). Methodologies can be defined as the systematic system that defines methods used in research or in undertaken study. Empirical research design is the mode that is used in positive accounting theory in present article. Following are some limitations of positive accounting theory that are used in “Half a Defence of Positive Accounting Research”:
- Positive accounting theory does not provide base for making improvement in accounting practices but this theory only considers analysis and explanation of concepts used (Cooper et al., 2012). Therefore this is not enough productive.
- Assumption of positive accounting theory is vague or does not comply with generally accepted guidelines or principles of generality. It assumes that all actions and steps taken are related to or applies to self – interest.
- Positive accounting theory does not stand in generality concept and is based on individual accounting concept. On the other hand there is vast variety of accounting choices but positive accounting theory uses only individual choice.
- Positive accounting theory is scientifically proved and there has been less development of this theory. Therefore applicability of positive accounting theory is still in question (Kabir, 2010).
Significance and limitations of the article
Author of the present article make acceptable effort to overcome above mentioned limitation of positive accounting theory. Test of hypothesis has been used for making analysis of positive accounting theory. Question over hypothesis test has been raised in this article to support positive accounting theory practices and logics (Greiff et al., 2012). Methodologies include test of various aspects and concepts on the basis of logics and substance of undertaken practice.
Author has drawn theoretical conclusions on the basis of results or methodologies that are used in the article. Methodologies related to effect of positive research programme has been undertaken in this article so that. With the aim of understanding and reading human behaviour in the organisations and in complex setting of accounting researches, has been analysed and examined on this article (Ranjan & Read, 2016). Author also tries to make available information related to things or concepts that are essential for positive research. Author had tested vulnerable models that have suggested that individuals or researchers have gained from Popperian approach, that in modern era researchers or individual demands too much from theoretical models. In other words, expectations of researchers have been increased in terms of use and applicability of theoretical theories or framework (Homburg, Schwemmle & Kuehnl, 2015). In this article, author also tries to explain demand of audit fees according to legal regime and according to level of complexity involve in auditing process. It has been observed that, higher audit fees are charged by auditors or accountants on the basis of legal regime. This concept has proved to be important in terms of understanding concept of research finding according to methodologies used in the research (Jindra, 2014).
According to analysis of this section, it can be concluded that theoretical conclusions drawn by author in present article is not justified by the methodologies used in the article. Theoretical conclusions includes various frameworks and analysis of different situations where theory over rules practical or logical sequence of research (Richardson, 2008). Therefore it can be analysed that, author’s contention or theoretical framework does not support methodologies.
Conclusions
From the analysis of current article it can be concluded that current practices of accounting that are adopted in research activities are not up to the mark as they should be. Positive accounting research has shown downwards trend in terms of using only quantitative measures. It can be conclude, analytical models does not provide better base for decision making because they concentrate only on trends or they are not adequately developed. Another conclusive point that can be analysed in this article is of measurement techniques so that theoretical models can be effectively tested. Papers shall concentrate on improving measurement of theories or concepts and should not focus on testing techniques of concept or theory (Sarvi, Fayaz & Sarvi, 2013). It can be concluded that testing of hypotheses is not adequate in terms of analysing the results and hypothesis results provide vague basis for decision making to researchers. It can be concluded that replication is required in positive accounting research so as to overcome many drawbacks that these theories or concepts has. Positive accounting researches has contributed to understand human behaviour to the great extend. Implications that can be drawn from this article are related to design, development, structuring and application of accounting theories and framework in the field of knowledge. There are some theories that are statistically sound (in terms of using statistical measures or practices) but their application in real sense is mealy assumed. Positive accounting research is functionally deficient but they are sound in terms of its concepts that it uses for decision making.
References
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