Accounting Theory and Current Theory Theoretical Framework

Question: Discuss about theAccounting Theory and Current Theory for Theoretical Framework. Answer: Introduction The present paper is developed in order to provide a critical analysis of the research article entitled Half a Defense of Positive Accounting Research written by Paul V. Dunmore. The research topic is about discussing the significance of positive accounting theory in carrying out accounting researches and identifying its deficiencies for developing better theoretical models for future accounting context. The overall research article has examined the positive approach to accounting research by presenting the set of ontological and epistemological assumptions related to it (Dunmore, 2009). The main aim of the critical analysis carried out in this paper is to explore the various aspects of positive accounting theory for improving the future scope of accounting researches. The paper has evaluated and examined the main arguments presented in the given research article for providing its proper explanation to the readers. The paper has evaluated the argument analyzed in the given research a rticle that is whether positive accounting theory is able to maintain scientific nature of accounting researches. The main key points of the research article are analyzed through providing its summary, research question, theoretical framework, significance and limitations of the article and at last presenting its conclusion. Summary of Article This section of the paper has summarized the overall findings gathered from the research article. The author in the research article has stated that positive accounting theory developed by Watts and Zimmerman was intended to explain human behavior in accounting settings. The main aim of the research article is to discuss the importance and deficiencies of positive accounting theory to accounting settings. The theory was developed mainly to provide help to accountants at the time of financial reporting by gaining knowledge from the real world situations. The theory was largely used in resolving accounting issues by business entities through making predictions about the accounting policies to be selected and implementing the best solution for resolving the accounting problem (Kabir, 2008). The author in the research article argues that although positivist research is commonly used in accounting settings it is associated with many drawbacks. The theory of positive accounting is associat ed with many problems that limit its applicability in scientific researches. The major problems of positivist research are examined and analyzed by the author in the overall research article (Dunmore, 2009). The major drawbacks of the PAT (Positive Accounting Theory) as illustrated by the author in the research article are lack of quantitative testing of explanations derived from the theory and absence of constructing a theoretical model based on numerical values of parameters. The author in the research article has incorporated the use of Poppers falsification criterion in order to provide an understanding of the theories to be accepted on the basis of quantitative and qualitative parameters. The author has analyzed and examined the ontological and epistemological assumptions for evaluating the importance and deficiencies of positive accounting research. The concept of positive accounting was introduced mainly to support decision-making process of firm managers. The theory was used by managers for taking decision in relation to pricing, reporting and implementing accounting standards for financial reporting (Schiehl et al., 2007). However, the author in the research article has discussed that accounting researchers analyzed human behavior without taking into account any rational behavior. Thus, accounting researches does not predict how auditors make judgments or what methods are adopted by managers in disclosing accounting information. Thus, the positive research program is much wider than the concepts of positive accounting theory. The theory of positive accounting theory only emphasizes on explaining the rational behavior in accounting settings however positivist research examines behavior without making any rational assumptions. As per the author, the accounting research aims at developing an understanding of particular accounting phenomena without assuming rational or irrational behavior. Therefore, in accordance with the author the positive accounting theory is not appropriate for achieving the aims and objectives of scientific accounting researches. Thus, the author has recommended that there is high ne ed for developing other theoretical models in accounting settings that are able to explain the rational as well as irrational causes of particular accounting phenomena (Dunmore, 2009). Research Question The research study is centered on gathering answer to the following research question Does PAT (Positive Accounting Theory) is able to succinctly explain the accounting phenomenas? In context of this main research question, the study also addresses the following sub-research questions: What is the contribution of positive accounting theory to accounting researches? Does positive accounting theory is able to successfully achieve the aims and objectives of scientific accounting researches? What are the common deficiencies of positive accounting theory that limits its applicability in accounting researches? The research questions stated above are developed from analyzing the main arguments presented in the literature review section of the research article (Dunmore, 2009). Theoretical Framework The author in the research article has critically reviewed the work of other researches in context of positive accounting theory and its contribution in accounting researches. As per the theoretical framework demonstrated by the author in the research article, positive accounting theory is proving to be insufficient in providing an adequate understanding of the accounting phenomenas. Thus, there is need for developing new theoretical models for conducting accounting researches that can help in better resolving of accounting issues (Sennetti and Litt, 2013). The author has stated that positive accounting theory is mainly based on theoretical lenses and thus is not appropriate for providing an adequate explanation of the quantitative parameters in accounting. The best understanding of the acceptance or rejection of a theory as quantitative or qualitative is provided by Poppers falsification criterion as stated by the author in the research article (Dunmore, 2009). As per poppers criterions, the scientific researches always incorporate the collection of data that can be quantitative or qualitative. The development of scientific theory consist of the followings steps as stated by Poppers falsification criterion. The step involves observing preliminary ideas and developing a formal theory based on the observed ideas. The theory developed should be based on testable predictions that are in accordance with all the gathered empirical evidences (Fieldsa, Lysb and Vincent, 2001). The predictions developed should be quantitative as they can be easily tested through falsification. This is followed by testing the predictions obtained from the theory developed against the predictions of old theories. The outcome obtained provides a basis for accepting or rejecting a theory as the theory that fails the test whether new or old is rejected. The theories are thus falsified to be based on scientific basis by the use of Poppers criterion. Thus, the author has p roposed that scientific nature of positive accounting theory need to be tested through the use of Poppers falsification criterion (Dunmore, 2009). The author has pointed the main weaknesses existing in the quantitative and qualitative positive accounting research through the use of Poppers procedure of falsification. The scientific researchers are mainly assumed to be quantitative in nature but some researches as pointed by the author are purely qualitative also such as Darwins theory of evolution. The author has proposed that qualitative positive research in accounting needs to be undertaken for developing a proper understanding of accounting phenomena before examining its quantitative parameters. The qualitative positive researches also provide a basis for testing the quantitative predictions of quantitative researches (Slaheddine, 2014). However, the main weakness of qualitative positive research is that theoretical explanations derived from them are not tested. On the other hand, quantitative positive accounting research though based on testable predictions has an undue reliance on logic of hypothesis testing (Dunmore, 2009 ). The author in the research article has also illustrated the major weaknesses of logic of statistical hypothesis testing. The logic of hypothesis testing is only based on testing the null and alternative hypothesis. However, the alternative hypothesis is not fully specified in null hypothesis testing. Thus, the author has stated that accounting filed should incorporate the use of statistics in providing an accurate answer for accounting problems but the main goal should be based on estimation and not on hypothesis testing. Thus, the main weakness of positive accounting research is that it mainly uses the logic of hypothesis testing that is not able to provide accurate evidence in support of alternative hypothesis (Dunmore, 2009). The author has emphasized that there exist a need for focusing on measuring the concepts in quantitative accounting researches rather than testing. The accounting concepts need to be defined and measured appropriately before they are tested through the use of hypothesis (Abedini and Bazrafshan, 2016). The author has thus illustrated the deficiencies existing in both qualitative and quantitative positive accounting research. Thus, the development of better theoretical models is proposed that is mainly based on incorporating the potential role of measurement in explaining the accounting phenomenas. The adoption of the concept of measurement is essential is order to analyze the operational deficiencies in a particular accounting concept and thus proposing the adoption of best accounting concept for resolving a particular problem (Gaffikin, 2008). Thus, the research article has mainly illustrated in its theoretical framework that there exist a wide gap between the actual practice of positive accounting research and that required to make its effective contribution to the accounting research program. The author has proposed several suggestions for improving the quantitative positive research. The major recommendations involve adopting better theoretical models that are based on measurem ent rather than hypothesis testing. There is need for development of elaborate theoretical models that are based on measurement concept and thus provides an adequate explanation of accounting concepts that is well-defined to be operationalized (Dunmore, 2009). Significance and Limitations of the Article The research article is highly significant in providing an accurate explanation of the deficiencies present in positive accounting research. The overall research study is based on illustrating the gap that is present in positive accounting research and the need of adopting better theoretical models in accounting settings. The author has also proposed the development needed in positive accounting theory so that it is able to successfully achieve the aims and objectives of scientific accounting researches. The research study has also highlighted the need for conducting more researches for analyzing the usefulness of positive accounting theory in conducting accounting researches. Thus, the research study is highly important and valuable in proposing the development required in accounting settings for resolving the accounting issues appropriately. On the other hand, the major limitation of the research article is that it is based only on collecting and analyzing qualitative data. Thus, t he research study is mainly a secondary study that is based on analyzing and evaluating the data that is already published in the previous research studies. The research study thus lacks the demonstration of any new findings extracted from the collection of primary data that is not previously explored by any other researcher. Also, the research study is highly complex in nature and lacks a sequential flow of information (Dunmore, 2009). The information flow in the overall research article is not proper and thus it lacks validity and credibility in the eyes of readers (Smith, 2011). Conclusion The overall research article has demonstrated that there is need for developing better theoretical models for achieving the aims and objectives of scientific accounting research. The quantitative accounting researches should not only rely on the use of hypothesis testing but rather emphases should be on measuring the accounting parameters. There is need for adopting the concept of measurement in accounting settings so that theoretical models can be rigorously tested. This is necessary for the development of better and improved theoretical models that can be applied to scientific accounting researches. It is also concluded from the research arcle that positive accounting researches is much wider than the concepts of positive accounting theory. The positive accounting theory is only effective in explaining the rational human behavior in accounting settings however positive accounting researches also incorporates non-rational assumptions for explaining the cause and effect relationships . Therefore, it can be stated from the overall research study that positive accounting theory is inappropriate in successfully conducting quantitative or qualitative accounting researches. References Abedini, B., and Bazrafshan, M. 2016. Accounting Choices Determinants Underlying the Positive Accounting Theory. Journal of Management Sciences 2(8), pp. 448-452. Dunmore, P.V. 2009. Half a Defence of Positive Accounting Research. Fieldsa, T. D., Lysb, T. Z., and Vincent, L. 2001. Empirical research on accounting choice. Journal of Accounting and Economics 31, pp. 255307. Gaffikin, M. 2008. Accounting Theory: Research, Regulation and Accounting Practice. Pearson Education. Kabir, M. H. 2008. Positive Accounting Theory and Science. Positive Accounting Theory and Science, pp. 134-148. Schiehl, E. et al. 2007. Financial accounting: an epistemological research note. Revista Contabilidade Finanas 18(45). Sennetti, J., and Litt, B. 2013. Persuasion as a Prelude to Proof: Theory Acceptance in Accounting Research. Advances in Business Research 4(1), pp. 54-67. Slaheddine, Y. 2014. The Relationship between Accounting Theories, Financialization Process and Neoliberalism. International Journal of Economics and Management 3, pp. 166. Smith, M. 2011. Research Methods in Accounting. SAGE.