Preview

Positive Accounting Theory

Powerful Essays
Open Document
Open Document
9608 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Positive Accounting Theory
136

Positive Accounting Theory and Science

JCC
Journal of CENTRUM Cathedra ™

Positive Accounting Theory and Science by M. Humayun Kabir Senior Lecturer, Faculty of Business Auckland University of Technology, Auckland, New Zealand

Abstract
This paper examines the development of positive accounting theory (PAT) and compares it with three standard accounts of science: Popper (1959), Kuhn (1996), and Lakatos (1970). PAT has been one of the most influential accounting research programs during the last four decades. One important reason which Watts & Zimmerman (1986) have used to popularize and legitimize their approach is that their view of accounting theory is the same as that used in science. Thus, it is important to examine how far accounting has been successful in imitating natural science and how the development of PAT compares with the three standard accounts of science. This paper shows that accounting could not emulate the success of natural science. Further, the methodological positions of PAT conform to none of the standard accounts of science. Rather, PAT contains elements of all three. Finally, this paper identifies some methodological gaps in PAT. Keywords: Positive Accounting Theory, Philosophy of Science, Methodological Controversies

Acknowledgements
I would like to thank two anonymous reviewers of the journal for their helpful comments. Earlier versions of this paper benefited from comments from Lee Parker of the University of South Australia, Keith Hooper of Auckland University of Technology, Divesh Sharma of Kennesaw State University, and Santi Narayan Ghosh of the University of Dhaka.

Introduction
This paper examines the development of positive accounting theory (PAT) and compares it with three standard accounts of science. There is some confusion about what PAT is. If the definition of accounting theory (i.e., accounting theory seeks to explain and predict accounting and auditing practice) given in Watts and Zimmerman’s 1986


References: Ahmed, A. S., & Duellman, S. (2007). Accounting conservatism and board of director characteristics: An empirical analysis. Journal of Accounting and Economics, 43, 411-437. Ali, A., & Hwang, L.-S. (2000). Country-specific factors related to financial reporting and the value relevance of accounting data. Journal of Accounting Research, 38, 1-21. American Accounting Association (AAA), Financial Accounting Standards Committee (FASC). (2005). Response to the FASB’s exposure draft: FVAs. Accounting Horizons, 19, 187-196. Ball, R. J., & Brown, P. (1968). An empirical evaluation of accounting income numbers. Journal of Accounting Research, 6, 159-178. Ball, R., Robin, A., & Wu, J. (2003). Incentives versus standards: Properties of accounting income in four East Asian countries. Journal of Accounting and Economics, 36, 235-270. Ball, R., & Shivakumar, L. (2006). The role of accruals in asymmetrically timely gain and loss recognition. Journal of Accounting Research, 44, 207-242. Barth, M. E., Beaver, W. H., & Landsman, W. R. (1996). Value-relevance of banks’ fair value disclosures under SFAS 107, The Accounting Review, 71, 513-537. Barth, M. E., Beaver, W. H., & Landsman, W. R. (2001). The relevance of the value relevance literature for financial accounting standard setting: Another view. Journal of Accounting & Economics, 31, 77-104. Barth, M., & Clinch, G. (1998). Revalued financial tangible and intangible assets: Associations with share prices and non-market based value estimates. Journal of Accounting Research, 36 (supplement), 199-233. Basu, S. (2004). What do we learn from two new accounting-based stock market anomalies? Journal of Accounting and Economics, 38, 333-348. Beaver, W. H. (1968). The information content of annual earnings announcements. Empirical Research in Accounting: Selected Studies, Journal of Accounting Research, 6 (supplement), 67-92. Beaver, W. H., Clarke, R., & Wright, W. (1979). The association between unsystematic security returns and the magnitude of earnings forecast errors. Journal of Accounting Research, 17, 316-340. Beaver, W. H., Lambert, R., & Morse, D. (1980). The information content of security prices. Journal of Accounting and Economics, 2, 3-28. Becker, C. L., Defond, M. L., Jiambalvo, J., & Subramanyam, K. R. (1998). The effect of audit quality on earnings management. Contemporary Accounting Research, 15, 1-24. Begley, J., & Freedman, R. (2004). The changing role of accounting numbers in public lending agreements. Accounting Horizons, 18, 81-96. Benston, G. J. (2006). Fair value accounting: A cautionary tale from Enron. Journal of Accounting and Public Policy, 25, 465-484. Biddle, G. C., & Lindahl, F. W. (1982). Stock price reactions to LIFO adoptions: The association between excess returns and LIFO tax savings. Journal of Accounting Research, 20, 551-588. Blaug, M. (1992). The methodology of economics or how economists explain (2nd ed.). Cambridge, England: Cambridge University Press. Brinn, T., Jones, M. J., & Pendlebury, M. (1996). UK accountants’ perceptions of research journal quality. Accounting and Business Research, 26, 265-278. Burgstahler, D., & Dichev, I. (1997). Earnings management to avoid earnings decreases and losses. Journal of Accounting & Economics, 24, 99-129. Bushee, B. (1998). The influence of institutional investors on myopic R&D investment behavior. The Accounting Review, 73, 305-333. Byrne, A., I. Clacher, D. Hillier, & A. Hodgson, (2008). Fair value accounting and management discretion. Retrieved January 12, 2009, from http://ssrn.com/abstract=1101691 Chalmers, A. F. (1999). What is this thing called science? (3rd ed.). Indianapolis, IN: Hackett Publishing Company. Chambers, R. J. (1966). Accounting, evaluation and economic behavior. Englewood Cliffs, NJ: Prentice Hall. Chambers, R. J. (1993). Positive accounting theory and the PA cult. Abacus, 29, 1-26. Christenson. C. (1983). The methodology of positive accounting. Accounting Review, 58, 1-22. Christie, A. A. (1990). Aggregation of test statistics: An evaluation of the evidence on contracting and size hypotheses. Journal of Accounting & Economics, 12, 15-36. Clarkson, P., Hanna, J. D., Richardson, G. D., & Thompson, R. (2009). The impact of IFRS adoption on the value relevance of book value and earnings. Retrieved August 19, 2009, from http://www.afaanz.org/openconfafaanz2009/modules/request.php?module=oc_proceedings&action=view.php&a=Accept+as+Paper&id=23 Coase, R. H. (1937). The Nature of the Firm. Economica, 386-405. Deakin III, E. B. (1979). An analysis of differences between non-major oil firms using successful efforts and full cost methods. The Accounting Review, 54, 722-734. Positive Accounting Theory and Science DeAngelo, L. E. (1986). Accounting numbers as market valuation substitutes: A study of management buyouts of public shareholders. The Accounting Review, 61, 400-420. DeAngelo, L. E. (1988). Managerial competition, information costs, and corporate governance: The use of accounting performance measures in proxy contests. Journal of Accounting and Economics, 10, 3-36. Dechow, P., & Dichev, I. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The Accounting Review, 77 (supplement), 35-59. Dechow, P. M., & Sloan, R. G. (1991). Executive incentives and the horizon problem. Journal of Accounting & Economics, 14, 51-89. Dechow, P. M., Sloan. R. G., & Sweeney, A. P. (1995). Detecting earnings management. The Accounting Review, 70, 193-225. Deegan, C. (1997). Positive accounting theory: A useful tool for explanation and prediction, or a body of vacuous, insidious and discredited thoughts. Accounting Forum, 21, 63-72. Deegan, C. (2007). Financial accounting theory. North Ryde, NSW, Australia: McGraw-Hill Irwin. Dhaliwal, D. S. (1980). The effect of the firm’s capital structure on the choice of accounting methods. The Accounting Review, 55, 78-84. Duke, J. C., & Hunt III, H. G. (1990). An empirical examination of debt covenant restrictions and accountingrelated debt proxies. Journal of Accounting and Economics, 12, 45-63. Durkheim, E. (1964). The rules of sociological method, Glencoe, IL: Free Press. Eccher, A., Ramesh, K., & Thiagarajan, S. R. (1996). Fair value disclosures by bank holding companies. Journal of Accounting and Economics, 22, 79-117. Edwards, J. R. (1989). A history of financial accounting, London, England: Routledge. Fay, B. (1996). Contemporary philosophy of social science, Oxford, England: Blackwell. Feyerabend, P. (1993). Against method, New York, NY: Verso Books. Foster, G. (1977, January). Quarterly accounting data: Time-series properties and predictive-ability results. Accounting Review, 52, 1-21. Francis, J. R., Maydew, E. L., & Sparks, H. C. (1999). The role of Big 6 auditors in the credible reporting of accruals. Auditing: A Journal of Practice and Theory, 18(2), 17-34. Frankel, R. M., Johnson, M. F., & Nelson, K. K. (2002). The relation between auditors’ fees for nonaudit services and earnings management. The Accounting Review, 77 (supplement), 71-105. Grant, E. B. (1980, Spring). Market implications of differential amounts of interim information. Journal of Accounting Research, 18, 255-268. Hagerman, R. L., & Zmijewski, M. E. (1979). Some economic determinants of accounting policy choice. Journal of Accounting & Economics, 1, 141-161. Hall, S. C. (1997). In defense of positive accounting theory. Accounting Forum, 21, 43-52. Healy, P. M. (1985, April). The effect of bonus schemes on accounting decisions. Journal of Accounting and Economics, 7, 85-107. Hines, R. D. (1988, October). Popper’s methodology of falsificationism and accounting research. The Accounting Review, 657-662. Hirshleifer. D., Hou, K., Teoh, S. H., & Zhang, Y. (2004). Do investors overvalue firms with bloated balance sheets? Journal of Accounting & Economics, 38 (1-3), 297-331. Holthausen, R. W., & R. L. Watts, (2001). The relevance of the value-relevance literature for financial accounting standard setting, Journal of Accounting and Economics, 31, 3–75 Hung, M, & Subramanyam, K. R. (2007). Financial statement effects of adopting international accounting standards: the case of Germany. Review of Accounting Studies, 12, 623-657. Ijiri, Y. (1975). Theory of accounting measurement. Studies in Accounting Research. Sarasota, FL: American Accounting Association. International Accounting Standards Board (IASB), (2009). Presentation of Financial Statements. International Accounting Standard 1. London, England: IASCF. International Auditing and Assurance Standards Board (IAASB). (2009). Identifying and assessing the risks of material misstatement through understanding the entity and its environment. International Standard on Auditing 315. Retrieved from http://web.ifac.org/download/a017-2010-iaasb-handbook-isa-315.pdf Jones, J. J. (1991). Earnings management during import relief investigations. Journal of Accounting Research, 29, 193-228. Kaplan, R. S., & Roll, R. (1972). Investor evaluation of accounting information: Some empirical evidence. Journal of Business, 45, 225-257. Kaplan, R. S. (1985). Comments on Paul Healy: Evidence on the effect of bonus schemes on accounting procedures and accrual decisions. Journal of Accounting and Economics, 7, 109-113. Kothari, S. P., Leone, A. J., & Wasley, C. E. (2005). Performance matched discretionary accrual measures. Journal of Accounting and Economics, 39, 163-197. 147 148 Positive Accounting Theory and Science Krishnan, G. V. (2003). Does Big 6 auditor industry expertise constrain earnings management? Accounting Horizons, 17 (supplement), 1-16. Kuhn, T. S. (1996). The structure of scientific revolutions (3rd ed.), Chicago, IL: The University of Chicago Press. Lakatos, I. (1970). Falsification and the methodology of scientific research programmes. In I. Lakatos & A. Musgrave (Eds.) Criticism and the growth of knowledge, Cambridge, England: Cambridge University Press. Landsman, W. R. (2007). Is fair value accounting information relevant and reliable? Evidence from capital market research. Accounting and Business Research, Special Issue: International Accounting Policy Forum, 19-30. Lessnoff, M. H. (1974). The structure of social science- A philosophical introduction, London, England: George Allen & Unwin. Lev, B., & Zarowin, P. (1999). The boundaries of financial reporting and how to extend them. Journal of Accounting Research, 37(2), 353-385. Lev, B. (2001). Intangibles management, measurement, and reporting. Washington, DC, Brookings Institution Press. Liberty. S. E., & Zimmerman, J. L. (1986). Labor union contract negotiations and accounting choices. The Accounting Review, 61(4), 692-712. Littleton, A. C. (1953). Structure of accounting theory. Monograph No. 5. Sarasota, FL: American Accounting Association. MacNeal, K. (1970). Truth in accounting. Houston, Tx: Scholars Book Company. (Original work published1939) McNichols, M., & Manegold, J. G. (1983). The effect of the information environment on the relationship between financial disclosure and security price variability. Journal of Accounting & Economics, 5, 49-74. McNichols, M., & Wilson, G. P. (1988). Evidence of earnings management from the provision for bad debts. Journal of Accounting Research, 26 (supplement), 1-31. Milne, M. (2002). Positive accounting theory, political costs and social disclosure analyses: A critical look. Critical Perspectives on Accounting, 13(3), 369-395. Morais, A. I., & Curto, J. D. (2009). Mandatory adoption of IASB standards: Value relevance and country-specific factors. Australian Accounting Review 46: 128- 143. Mouck, T. (1990). Positive accounting theory as a Lakatosian research program. Accounting and Business Research, 20, 231-239. Ness, K. E., & Mirza, A. M. (1991). Corporate social disclosure: A note on a test of agency theory. British Accounting Review, 23(3), 211-217. Neu, D. (1997). Positive accounting theory: A pragmatic assessment. Accounting Forum, 21, 53-62. Nichols, D. C., & Wahlen, J. M. (2004). How do earnings numbers relate to stock returns? A review of classic accounting research with updated evidence. Accounting Horizons, 18, 263-286. Paton, W. A., & Littleton, A. C. (1940). An introduction to corporate accounting standards. Monograph No. 3. American Accounting Association. Peasnell, K. V., Pope, P. F., & Young, S. (2005). Board monitoring and earnings management: Do outside directors influence abnormal accruals? Journal of Business Finance & Accounting, 32, 1311-1346. Popper, K. (1959). The logic of scientific discovery. London, England: Routledge. Popper, K. (1970). Normal science and its dangers. In I. Lakatos and A. Musgrave (Eds.) Criticism and the growth of knowledge, Cambridge, England: Cambridge University Press. Pourciau, S. (1993). Earnings management and nonroutine executive changes. Journal of Accounting and Economics, 16, 317-336. Press, E. G., & Weintrop, J. B. (1990). Accounting-based constraints in public and private debt agreements: Their association with leverage and impact on accounting choice. Journal of Accounting and Economics, 12, 65-95. Reitenga, A. L., & Tearney, M. G. (2003). Mandatory CEO retirements, discretionary accruals, and corporate governance mechanisms. Journal of Accounting, Auditing, & Finance, 18, 255-280. Ricks, W. (1982). The market’s response to the 1974 LIFO adoptions. Journal of Accounting Research, 20, 367387. Sawabe, N., & Yamaji, H. (1999). Institutional accounting research: An introduction. In S. Sunder and H.Yamaji (Eds.) The Japanese Style of Business Accounting, Westport, CT: Quorum Books, Sloan, R. G. (1996). Do stock prices fully reflect information in accruals and cash flows about future earnings? The Accounting Review, 71, 289-316. Soderstrom, N. S., & Sun, K. J. (2007). IFRS adoption and accounting quality: A review. European Accounting Review, 16, 675-702. Sterling, R. R. (1990). Positive accounting: An assessment. Abacus, 26, 97-135. Sue, M. (1997). Comments on positive accounting theory: A necessarily blinkered view. Accounting Forum, 21, 73-80. Sunder, S. (1973). Relationship between accounting changes and stock prices: Problems of measurement and some Positive Accounting Theory and Science empirical evidence. Empirical Research in Accounting: Selected Studies, Journal of Accounting Research, 11 (supplement), 1-45. Sunder, S. (1975). Stock price and risk related to accounting changes in inventory valuation. Accounting Review, 50, 305-315. Sunder, S. (1997). Theory of accounting and control. Cincinnati, OH: Thomson. Sunder, S. (1999). Design and implementation of contracts: A comparison of factor markets relevant to financial reporting in Japan and the United States. In S. Sunder and H. Yamaji (Eds.) The Japanese style of business accounting. Westport, CT: Quorum Books. Taffler, R. J., Lu, J., & Kausar, A. (2004). In denial? Market underreaction to going-concern audit report disclosures. Journal of Accounting and Economics, 38, 263-296. Teoh, S. H., Wong, T. J., & Rao, G. R. (1998). Are accruals during initial public offerings opportunistic? Review of Accounting Studies, 3, 175-208. Watts, R. L. (2003a). Conservatism in accounting, part I: Explanations and implications. Accounting Horizons, 17, 207-221. Watts, R. L. (2003b). Conservatism in accounting part II: Evidence and research opportunities. Accounting Horizons, 17, 287-301. Watts, R., & Zimmerman, J. (1978). Towards a positive theory of the determination of accounting standards. Accounting Review, 53, 112-134. Watts, R. L., & Zimmerman, J. L. (1986). Positive accounting theory, Englewood Cliffs, NJ: Prentice-Hall. Watts, R. L, & Zimmerman, J. L. (1990). Positive accounting theory: A ten year perspective. The Accounting Review, 65, 131-156. Whitley, R. D. (1988). The possibility and utility of positive accounting theory. Accounting, Organizations, and Society, 13, 631-645. Whittington, G. (1987). Positive accounting: A review article. Accounting and Business Research, 17, 327-336. Zmijewski, M., &Hagerman, R. (1981, August). An income strategy approach to the positive theory of accounting standard setting/choice. Journal of Accounting and Economics, 3, 129-149. 149 Footnotes 1 See, for example, Chambers (1966), Ijiri (1975), Littleton (1953), MacNeal (1939), and Paton and Littleton (1940). 2 This section is largely based on Watts and Zimmerman (1986). 3 Watts and Zimmerman (1986, Chapter 3 and 4) review some early studies of this literature. 4 The no-effects hypothesis says that stock price changes are not associated with voluntary changes in accounting procedures unless they have any cash flow impacts. This hypothesis is based on EMH, CAPM, and zero contracting costs. On the other hand, the mechanistic hypothesis posits a mechanical relation between accounting changes and stock price changes. This hypothesis states that managers can systematically mislead the stock market by manipulating the earnings number through accounting changes. The no-effects hypothesis, on the other hand, says that the market can see through the earnings number. See Watts and Zimmerman (1986, pp. 72-76). 5 Contracting costs denote the amalgam of transaction costs, information costs, agency costs, renegotiation costs, and bankruptcy costs ( Watts & Zimmerman, 1990, pp. 134-135). 6 Under the EMH and CAPM regime, accounting is mere form and does not affect cash flow except the switch to the LIFO inventory method that affects tax in the USA. 7 One such decision is to demarcate the theory under test from the unproblematic background knowledge. (Lakatos, 1970, p. 107). 8 See Watts and Zimmerman (1990) for this and other criticisms of the positive accounting literature. * Correspondence concerning this article should be directed to Humayun Kabir at: humayun.kabir@aut.ac.nz
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Better Essays

    Hrm 531 Week 1 Question Paper
    • 888 Words
    • 4 Pages

    Hrm 531 Week 1 Question Paper

    3.Williams, J.R., Haka, S.F., & Bettner, M.S. (2005). Financial and managerial accounting: The basis for business decisions (13th ed.). New York, NY:…

    • 888 Words
    • 4 Pages
    Better Essays
    Read More
  • Better Essays

    Acc 400 Week 5 Team Assignment
    • 1080 Words
    • 5 Pages

    Acc 400 Week 5 Team Assignment

    Williams, J., Haka, S., & Bettner, M. (2005). Financial and Managerial Accounting: The Basis for Business Decisions (13th ed.). Boston, MA: McGraw Hill.…

    • 1080 Words
    • 5 Pages
    Better Essays
    Read More
  • Powerful Essays

    ACC 504 Course Outline Winter 2015 All Sections

    • 4714 Words
    • 18 Pages

    ACC 504 Course Outline Winter 2015 All Sections

    This course begins with a conceptual review of accounting principles, and reviews issues studied in earlier courses from the point of view of the effects that accounting choices and “creative” accounting have on financial statements. This course emphasizes the role of communication in the accounting profession. Critical thinking and problem solving skills are developed through extensive case analysis.…

    • 4714 Words
    • 18 Pages
    Powerful Essays
    Read More
  • Better Essays

    Relationship Between the Ifrs and the Fasb
    • 1230 Words
    • 5 Pages

    Relationship Between the Ifrs and the Fasb

    The principle of accounting dates backs thousands of years to a time where those in positions of governance wanted to make others aware of their growth and progress. Shift forward, and now the principles of accounting have moved towards an interest in investments and creating wealth for all those who hold stock within the company. This has led to the creation of standards and guidelines by which these accounting principles adhere to, producing financial statements which follow the four qualitative characteristics (reliable, relevant, comparable, and understandable). The Financial Accounting Standards Board (FASB), under the guidance of the Securities Exchange Commission (SEC) established the GAAP which governs US companies with their application of accounting principles to the presentation of their financial statements. The IASB has created the IFRS which serves the same purpose but for the global financial community. A convergence of these two entities began in 2002 with the IASB and FASB coordinating together to produce accounting standards in a world where accounting standards are often amended. With ever-increasing changes in the realm of accounting it becomes important to for those in the profession of accounting to be aware of these changes and the impact they have on the reporting of a company’s financial outlook. The Masters of Accountancy program is designed to provide a comprehensive background of the creation of the FASB and the IASB, the relationship between their accounting standards, and how their standards measure up to one another.…

    • 1230 Words
    • 5 Pages
    Better Essays
    Read More
  • Satisfactory Essays

    Accounting Study Guide
    • 3574 Words
    • 15 Pages

    Accounting Study Guide

    1. Chapter 1 describes the environment that has influenced both the development and use of the financial accounting process. The chapter traces the development of financial accounting standards, focusing on the groups that have had or currently have the responsibility for developing such standards. Certain groups other than those with direct responsibility for developing financial accounting standards have significantly influenced the standard-setting process. These various pressure groups are also discussed in Chapter 1. Nature of Financial Accounting 2. (S.O. 1) Accounting may best be defined by describing the three essential characteristics of accounting: (1) identification, measurement, and communication of financial information about (2) economic entities to (3) interested persons. Financial accounting is the process that culminates in the preparation of financial reports on the enterprise as a whole for use by parties both internal and external to the enterprise. 3. (S.O. 2) Financial statements are the principal means through which financial information is communicated to those outside an enterprise. The financial statements most frequently provided are (1) the balance sheet, (2) the income statement, (3) the…

    • 3574 Words
    • 15 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Summary for the Failure of Accounting Research to Improve Accounting Practice: a Problem of Theory and Lack of Communication
    • 403 Words
    • 2 Pages

    Summary for the Failure of Accounting Research to Improve Accounting Practice: a Problem of Theory and Lack of Communication

    For the research of this paper, the author gives the definition of the research in Research is then designed and intended to use theory as a reference for the investigation. In general there are two types of theory—positive and normative. Positive theories like to give the description real world situation like what they are. A normative theory is a goal-oriented theory that represents real world situations, not the object in the real world what they are. But what they should be. And since the 1960s, accounting research has increasingly moved away from normative to positive.…

    • 403 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Current Business Problems
    • 317 Words
    • 2 Pages

    Current Business Problems

    Watts, R. (1990, January 1990). Positive Accounting Theory: A Ten Year Perspective. , 65, 131-156. Retrieved May 21, 2008,…

    • 317 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Earnings Management and Executive Compensation
    • 8718 Words
    • 35 Pages

    Earnings Management and Executive Compensation

    Earnings management has received several interpretations by many authors some of whom allude fraud to its application while others claim it is a legitimate exercise so long as the Generally Accepted Accounting Principles (GAAP) are not breached. The Statement on Auditing Standards…

    • 8718 Words
    • 35 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Positive Accounting Theory
    • 392 Words
    • 2 Pages

    Positive Accounting Theory

    • Organisations will seek to put in place mechanisms to align the interests of managers of the firm (agents) with the interests of the owners (principals)…

    • 392 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Positive Accounting Theory
    • 2249 Words
    • 9 Pages

    Positive Accounting Theory

    For example, positive accounting theory seeks to explain why firms continue to use historical cost accounting and why certain firms switch between a numbers of accounting techniques.…

    • 2249 Words
    • 9 Pages
    Powerful Essays
    Read More
  • Good Essays

    Zeff 1978
    • 5829 Words
    • 24 Pages

    Zeff 1978

    by Stephen A. Zeff Since the 1960s, the American accounting profession has been aware of the increasing influence of "outside forces" in the standardsetting process. Two parallel developments have marked this trend. First, individuals and groups that had rarely shown any interest in the setting of accounting standards began to intervene actively and powerfully in the process. Second, these parties began to invoke arguments other than those which have traditionally been employed in accounting discussions. The term "economic consequences" has been used to describe these novel kinds of arguments. By "economic consequences" is meant the impact of accounting reports on the decisionmaking behavior of business, government, unions, investors and creditors. It is argued that the resulting behavior of these individuals and groups could be detrimental to the interests of other affected parties. And, the argument goes, accounting standard setters must take into consideration these allegedly detrimental consequences when deciding on accounting questions.* The recent debates involving foreign currency translation and the accounting for unsuccessful exploration activity in the petroleum industry have relied heavily on economic consequences arguCopyright © 1978 by Stephen A. Zeff. *Ed. note: For the opinion of an accounting standard setter, see Oscar S. Gellein 's article in Statements in Quotes, p. 75.…

    • 5829 Words
    • 24 Pages
    Good Essays
    Read More
  • Good Essays

    Positive Accounting Theory
    • 452 Words
    • 2 Pages

    Positive Accounting Theory

    Accounting to Watts & Zimmerman (1990, page 7) Positive Accounting Theory is concerned with explaining accounting practice. It is designed to explain and predict which firms will and which firms will not use a particular method… but it says nothing as to which method a firm should use. It aims to explain and predict the managers’ consequences that are based on his/her choices.…

    • 452 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    IFRS IMPLEMENTATION IN NIGERIA
    • 5967 Words
    • 26 Pages

    IFRS IMPLEMENTATION IN NIGERIA

    related to the Accounting Tradition of the Countries” ? Journal of Applied Accounting Research, 10 (1), pp 33-55…

    • 5967 Words
    • 26 Pages
    Good Essays
    Read More
  • Powerful Essays

    accounting in pre-pacioli era; genesis and impact on the development of accounting profession in nigeria
    • 5099 Words
    • 29 Pages

    accounting in pre-pacioli era; genesis and impact on the development of accounting profession in nigeria

    Fleischman, R. K., Mills, P. and Tyson, T. N. (1996). A Theoretical Primer for Evaluating and Conducting Historical Research in Accounting. Accounting History, Vol 1, No.1, 55-75.…

    • 5099 Words
    • 29 Pages
    Powerful Essays
    Read More
  • Best Essays

    Accounting Information Qualitative Characteristics
    • 2645 Words
    • 11 Pages

    Accounting Information Qualitative Characteristics

    References: Dahmash, N. (1995). Financial Statements and Accounting Standards Generally Accepted.. Amman-Jordan. Kieso, D. E., Waygandt, J. J., & Warfield, T. D. (2005). Intermediate Accounting. (11 edition). Wiley Publisher. ACCPA, (2006) Journal of Accountancy, (Monthly Journal) September 2006, p. 17. Cheney, G. (2006). FASB, IASB request views on new reporting concepts. Accounting Today, Aug. 21-Sept. 3. Singleton-Green, B. (2006). The gathering. Retrived on Oct. 2006, from http://www.accountancymagazine.com Al-Duneibat, A. (2003) Structure and causes of the audit expectation gap: evidence from Jordan. DERASAT-Managerial Sciences, volume 30, No. 1.…

    • 2645 Words
    • 11 Pages
    Best Essays
    Read More

Related Topics