Positive Accounting Theory and Natural Science: A Critical Analysis

Summary of the Article

Discuss about the Positive Accounting Theory and Natural Science.

The research article ‘Half a Defence of Positive Accounting Research’ is based on analysing and examining the progress made in the field of managerial accounting research. The article has reviewed many of the current published literature about the usefulness of theoretical models for successfully completing the accounting research (Dunmore, 2009). In this context, the research paper has evaluated the contribution of positive accounting theory in achieving the scientific objectives of accounting research. The research paper has addressed the incorporation of other theories other than positive accounting for the purpose of attaining objectives of accounting research. The author in the article has proposed that positive research program is useful mainly for achieving theoretical objectives of accounting but is not efficient for attaining practical outcomes. The main argument proposed by the author through the research article is ‘whether positive accounting research is useful for attaining practical objectives of accounting research or not’. The research article has discussed in detail about both the importance and deficiencies of positive accounting theory to accounting research. The present essay aims to present a critical analysis of the research article through summarising its main points, identifying the research question, discussing its theoretical framework, describing the significance and limitations of the research article.

The research article has emphasised on the importance of adopting other theoretical approaches in accounting research besides positive accounting research. The concept of positive accounting research is defined as the concept of accounting that aims to explain the accounting practices selectee by the businesses for implementation. The theory is largely used by the accountants for predicting the real world situations and thus providing recommendation to them about the decisions to be taken. The theory mainly helps to predict the actions that the business organisations should take for maximising their financial performance. However, the theory is mainly criticised for its societal approach rather than emphasising on practical usefulness. Thus, it is largely ineffective in attaining the scientific objectives of a research. Thus, the author in the article has emphasised on the integration of other approaches to accounting in addition to positive accounting theory for achieving the scientific objectives of accounting research. The author has stated that scientific researches involve collection of data and as such positive approach to accounting does not seem to be useful for scientific accounting research (Rhonheimer, 2000).

Positive accounting research particularly aims to provide an understanding of the human behaviour through explaining the cause and effect relationships. The accounting research need to implement more practical approach for achieving its objectives rather than adopting the theoretical concepts of positive accounting theory (Chatfield and Vangermeersch, 2014). The article has concluded that economic based theory has been developed for guiding the managerial accounting research. This is mainly due to the lack of reliable and consistent practical data as accounting research mainly involves the collection of practical data. Thus, it has been summarised from the research article that recent practices used in accounting research does not adequately meet the requirement of quantitative accounting research. There is high need for better and improved theoretical models to be used by the accountants for developing the accounting policies used by business organisations. This will help the businesses to improve their financial performance by selecting an appropriate accounting policy (Ghnabari et al., 2016).

Research Question

The main research question of the research article can be stated as ‘What are the main deficiencies in the positive accounting theory that restricts it from attaining the objectives of managerial accounting research’? The research question has developed from the literature review as the theoretical framework of the article has emphasised on the strengths and weakness of positive accounting research to the field of accounting. The literature review has analysed the contribution of positive accounting research in the field of accounting. The use of better approaches in the accounting research as compared to the positive accounting theory is suggested in the overall literature of the research article.

The theoretical framework of the research article emphasises on the theoretical model of Positive Accounting Theory (PAT) used in accounting research. As discussed in the theoretical framework, positive accounting research is regarded as a major theoretical framework in the accounting research that impacts the managerial choices about the type of accounting policies to be used by the business organisations. The theory of PAT (positive accounting theory) has largely been regarded as one of the most effective theory that helps in determining the management decision about the financial reporting.  However, the theory is criticised recently as it is regarded as inappropriate for studying social science phenomena. The discussion revolves about the fact that material models of science such as positive accounting theory are not appropriate for analysing human behaviour. It is essential to interpret the observed behaviour on the basis of mental aspects. The theory is regarded as one of the most effective theory in the field of accounting research for predicting the accounting practices. However, due to various shortcomings identified in the theory there is need for the use of better theoretical models to be used for accounting research (Deegan, 2014).

The theoretical framework of the research article is well-organised into different sections for providing an in-depth understanding about the research topic. The research question itself flows from the theoretical framework of the research article. It has undertaken several aspects regarding the research topic in a well defined manner. The theoretical framework of the research article has highlighted that positive accounting theory though used largely in managerial accounting research but the disappointing progress made in this area is a direct result of the using ad hic quantitative models. There is need to adopt the use of more elaborate models in the field of accounting research in order to test the relationship between two variables.  The author has reviewed many literary sources in the theoretical framework for discussing about the various weaknesses of the positive accounting theory. The present theoretical models used in accounting research such as positive accounting theory is mainly based on theoretical approach. However, there is need for the use of more field-based research in accounting filed to attain its scientific objectives (Ghnabari et al., 2016).

Theoretical Framework

There is need for conducting more practical and less theoretical research in the field of accounting for developing a proper understanding of its various concepts. The reliance of accounting researches more on theoretical models as compared to the practical can be cited as on the major reason for the disappointing progress made in this field. The theoretical framework suggest that empirical accounting research should incorporate the use of more empirically testable theories that can help in predicting the human behaviour in accounting settings with practical outcomes. The underlying theory used by accountants at the time of decision-making in organisations should be based on testable predictions rather than theoretical approach. The researches should use economic-based hypothesis and adopt practice-oriented research for achieving its various objectives. The various concepts of the theories should be tested hypothetically for obtaining their practical evidence to be used in the empirical accounting research (Dunmore, 2009).

The research paper has also discussed the development of positive accounting theory in relation to the new approach of Popper. The popper’s criteria stated that researches involve collection of data for testing the theoretical concepts by developing hypothesis. The theories neither should nor be merely accepted on the basis of its past evaluation but should be statistically tested before its implementation in the accounting researches. The procedure of testing the concepts of heretical models used in accounting as described by Pooper is observing carefully for extracting the main ideas from the theories. The next step is testing the predictions obtained from the theory. The predictions obtained should be mainly quantitative in nature as qualitative predictions generally provide false results. The results obtained from previous theories should be compared with those obtained from new theories before adopting them to guide the empirical managerial accounting research. Thus, the theoretical framework of the research article has highlighted the shortcomings in present theoretical model used in accounting research. It has highlighted the need of better theoretical models in accounting field that can are more practical-oriented rather than having theoretical approach (Dunmore, 2009).

The research article is highly significant for developing an understanding of the various weaknesses that exit in positive accounting theory. The researches in accounting are largely guided by the concepts of positive accounting theory and therefore it is highly essential that accountants must improve the identified deficiencies in the theory. Positive accounting should be used in combination with other practice-oriented theoretical models for attaining the scientific objectives of the accounting researches. However, the main limitation as identified from the literature of the research article is its reliance on qualitative data. The author has mainly reviewed secondary literary sources for analysing the research topic and has not incorporated the use of quantitative data. The research methodology used by the author for attaining the objectives of the research is mainly qualitative in nature. This makes the research study more subjective in nature and therefore it lacks objectivity (Dunmore, 2009).

Limitations of Positive Accounting Theory

The author should have incorporated the use of quantitative data for hypothetical testing of various concepts of positive accounting theory to provide practical outcomes before the readers. This might have demonstrated solid evidence in front of the readers about the various deficiencies in the positive accounting theory. The discussion held in the research paper is mainly supported by qualitative data and does not have nay practical evidence. The theoretical conclusions drawn by the author are also not justified by the research methodology. The research methodology is purely qualitative in nature and the conclusion drawn by the author is mainly quantitative in nature. The theoretical conclusions drawn by the author need to be supported by the qualitative data for justifying them. All these limitations of the research article have impacted its significance to a large extent (Chatfield and Vangermeersch, 2014). This has negatively impacted the credibility of the research article to be used in future researches in the field of accounting. There is no support of theoretical conclusions by the quantitative data and this has made the research purely subjective. There is need of objectivity in the research for making its conclusions to be reliable and accurate in order to be used in quantitative accounting researches. The present research has a worthwhile contribution to offer in the future researches held in this context with its theoretical conclusions. The lack of quantitative data has impacted its credibility but the research article has highlighted the major problems encountered in the field of managerial accounting. It has provided a focused analysis of the management accounting researches held in the recent years. The researchers can develop an in-depth understanding of the management accounting research through the theoretical framework of the present research article (Dunmore, 2009).

Conclusion

The present research article as reviewed the recent literatures in the field of accounting research to analyse the contribution of positive accounting theory in this field. The author through the use of various literary sources in the article has argued to incorporate the use of better and improve theoretical models in the accounting researches. This is mainly due to the fact that current theoretical models used in accounting researches such as positive accounting theory lacks practical orientation. There is need for theoretical models that are based on testable predictions rather than having theoretical concepts. This will help the researchers to attain scientific objectives of the accounting research more easily. The author has suggested the use of positive accounting theory in addition with other practice-oriented theoretical models for conducting managerial accounting researches.

References

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.