Half a Defence of Positive Accounting Research- A Critical Analysis

Question: Discuss about the Half a Defence of Positive Accounting Researchfor a Critical Analysis. Answer: Introduction The main argument discussed in the said paper highlights the optimistic approach towards accounting research. Accounting is a subject where the reasons with regards the behavioural pattern of human beings are explored along with complexity of the entities. The personal communication is replaced by impersonal communications where the information shared helps in taking sound decisions. To investigate the pros and cons of the accounting research, ontological and epistemological assumptions are explored. The paper describes the shortages with regards the manner in which the said research is performed which defeats the actual meaning of the same. The structure of the paper is such that it details about the positive researches that has taken place in accounting along with testing of certain hypothesis. Lastly it emphasises upon the fact that what is needed in to conduct a successful accounting research program. Summary of the Article The said article is written from a positivist view point where the concept of building and thorough testing of the same is a priority. It talks about the fact that the research project is crucial. It assumes certain assumptions while conducting research such as the fact that in the common parlance it is easy to procure reliable data about the happenings in the world. The intellectual program discussed about in this article is on economics and accounting which the author calls it positive research. It further discusses some examples which make it apparent that the research in accounting is very different from the Positive Accounting Theories spelt out by eminent economists. The first theory was developed by two American Professors Ross Watts and Jerold Zimmerman who stated that people look for opportunities for to multiply their income and financial position (Trang Thao, 2015). The main purpose of the positive accounting research is not to dig into exploration and experience but discover causation. While conducting the research it may seem that ontology and epistemology is not right but at the same time calling it to be meaningless and bizarre is also not correct. The concept of positive investigation is not very old in the field of accounting. Next it discusses about the various tests and methodologies that should be undertaken so as to convert the observations and summaries into theories. Along with the same there are discussions held wherein people try to falsify the stated theories as well and also state the methodologies adopted for proving such a falsification. The paper also highlights the fact that only quantitative research is not the basis simply because people often confuse the word quantitative with positive. A successful positive research cannot be conducted in isolation and neither by just stating theories. The theoretical models should be thoroughly tested so much that they would become unacceptable. More importantly the said article has made it clear that a wide gap exists between the actual scenario with regards performance of positive accounting research and what developments is actually needed so as to effectively contribute to the intellectual program. Research Question The main research question which is the centre point is the scientific research in economics and accounting. The author wants to plough into the concept of positive accounting research. A stream of intellectual enquiry hypothesis is assumed wherein The people belong to a world where the events and the various other activities are free from any kind of influences and wishes. These events are a part of the world due to certain reasons. In the common parlance it is very easy to obtain data about the various events if the same is observed minutely. The main reason behind such an observation is to gain an insight into the world specifically the causation. The article also talks about the fact that positive accounting research and just accounting research are two different concepts. However the above mentioned hypothesis is deeply researched by asking open questions. Firstly it questions the fact of existence of agency and the social environment attached to it. Then it emphasizes upon the ontological and epistemological hurdles which prevent the understanding of the accounting phenomena. The main issue being discussed is the agency problem Once these hypothesis are stated, the same has to be tested for any kind of falsification and for the same Poppers criterion is said to be one of the best suited. However any theory cannot be falsified by a single observation. Another very crucial research theory that is discussed is the fact that qualitative research is more fruitful than quantitative research (Gaffikin,2007). Ultimately it talks about the requirements for a successful positive research program along with revelation of a gap with regards the actual performance of the positive accounting research and the things needed to make it more powerful. Theoritical Framework Many theories have been stated in the said article with regards the positive accounting research. The theoretical framework doubts the hypothesis stated above. Firstly it states that everything in this world is interrelated i.e. the social environment is dependent upon the human beings and vice versa. The main issue lies with the aspect of agency simply because humans tend to behave as per their own wishes without any influences and due to this there is a problem of rationality. Ontology and epistemology to be positive always is not right but at the same time it would be incorrect to call it unreasonable. Scientific research in economics and accounting is more focussed upon collection of adequate information be it in value terms or quality. It considers the theory stated by Popper as one of the most suitable one in terms of scientific research. Popper has stated certain steps to be followed which is observation and development of initial ideas, development of formal theory where the qualitative predictions are given more weightage in comparison to quantitative predictions as it is more prone to falsification. The new theory is again tested for falsification and the steps are repeated again until a theory is arrived, in which the falsification is at its minimal (Mealing, 2010). The main reason behind the same is to formulate one such theory amongst many which is the most effective of all. The framework also emphasises upon the fact that more than two theories are tested against each other as testing of a single theory will not reap results as desired. The same is illustrated in the bel ow mentioned diagram. SOURCE: Shuttleworth, 2010 Further to this it also mentions the ways and means adopted for falsification of theories. A single surveillance cannot fabricate a theory, in fact a series of observations which are decisive in nature help to prove whether a theory is acceptable or not. With regards positive accounting research both quantity and quality of data collected matters. The framework also defines the main reason behind conducting positive research in accounting. Firstly one needs to collect the relevant information which would enable development of initial understanding of the theory. For conducting quantitative research, a detailed conversation with the auditors and the client is required to be done so as to explore the various factors behind determination of the audit fees. Second purpose for conducting a qualitative positive research is for testing of the theories. The quantitative forecasts can be done basically with regards the explanations based on economics only. However, affirmations are the most frequently used theoretical framework which makes it clear that the components of the world behave in certain particular manner. It is this assertion that confirms the scope of the scientific research program. Unfortunately the qualitative accounting research method does not answer the said question as to whether such a claim is true or not. Assuming that the accounting information is prone to noise and measurement inaccuracies, statistics have a vital impact in positive accounting research. Statistics is basically estimation of the data and the same is incorrectly used in conjunction with hypothesis testing. Thus it can be rightly said that the hypothesis testing gives a very feeble proof in support of a particular substitute proposition. The author has confirmed that the positive accounting research points at understanding the human nature and the reasons for them to behave in an absurd manner. Further it also states that the decisions taken by humans in a complex setting of an organization is prejudiced by the specialised data and various internal control systems which are in place. The author also reiterates the fact that in order to gain out of the Popperian approach to positive research accounting, more and more theoretical models are required which should be tested thoroughly against relevant data. Further to this if the various eminent researchers test their models against the data then it is sure to fail the test. Simple reason being that the realities differ from the formulated models. Thus these theoretical frameworks clearly show that the positive accounting research is yet to be fully developed. Significance and Limitations of the Article The significance of the said article is that it discusses about the positive accounting research from a broader perspective. It highlights the behavioural pattern of human beings in the various organizational settings. The researches ontology and epistemology is thoroughly tested. Further the author has not just stated theories but also explained the same with examples and diagrams which makes it very comprehensive for the readers to judge. It does not accept theories and models in total but believes in conducting tests trying to prove the said models inadequate. Secondly the author believes in quality of work and models rather than just quantity. He also denies the dependability on any one theory and conducts tests of theories against each other to ensure better comparability of results and thus enabling ease in making decisions. The said article although is very significant in various aspects yet it has certain limitations which deters it from calling it a perfect one. The article does not discuss about the minute situations and just looks for the broader perspective. While analysing any data with a larger denominator , the small and specific numbers and analysis gets ignored. Secondly the author is too optimistic in his approach and thus tends to ignore the negative aspects as well which have a major impact on the models and the accounting theories practiced presently (Denzin, Lincoln 2000). Further to this the examples used in many places is also irrelevant to the topic i.e comparing the accounting research with mythology and such other religious stories which have no relation with the said concept. Lastly the author lacks in thinking multi-dimensional and continues to emphasise on the auditing as a subject matter. Author should have chosen from a more prominent area of accounting instead of choosing audi ting which is ore related to post accounting work. However since the author does not acknowledge these limitations due to a more positive view point, the significance of the said research gets defeated. Conclusion Thus on a concluding note the said research paper identifies the fact that the present practice adopted for conducting positive accounting research does not fulfil the requirements so much that the present research program is not operated effectively. The theoretical models formulated are not as per the requirements and do not serve the main purpose behind such formulations. Analysing the said theory and research just on the basis of auditing practice narrows down the theories to a considerable level. The fundamentals regarding the qualitative research is to be explored deeper which would enables testing of various theories simultaneously rather than testing any one in isolation. The positive accounting research undoubtedly has a major contribution to make in analysing the behavioural patterns of human beings in lieu of the complexity in the accounting profession as well as the entity. The main aim behind the said research is to enable the researchers perform their task with ease. Thus I feel that the said article has given adequate data with regards the positive accounting research but failed to give real life and more related examples to explain the theory more clearly. References Denzin, N.K., Lincoln Y.S., (2000), Handbook of Qualitative Research, Available at https://libguides.usc.edu/writingguide/qualitative (Accessed 14th December 2016) Gaffikin, M., (2007), Accounting Research and Theory : The age of neo-empiricism, Australasian Accounting Business and Finance Journal, vol.1, no. 1 Mealing, P.P., (2010), Karl Poppers Criterion, Available at https://journeymanphilosopher.blogspot.in/2010/03/karl-poppers-criterion.html (Accessed 14th December 2016) Shuttleworth, M., (2010), Karl Poppers Basic Scientific Principle, Available at https://explorable.com/falsifiability (Accessed 14th December 2016) Trang, T.N., Thao, P.H., (2015), Positive Accounting An Effective Trend For Vietnamese Accounting In the New Era, Available at https://www.rusnauka.com/29_PMN_2015/Economics/7_198718.doc.htm (Accessed 14th December 2016)