International Journal of Basic Sciences & Applied Research. Vol., 5 (2), 119-122, 2016
Available online at http://www.isicenter.org
ISSN 2147-3749 ©2016
Challenges Positive Accounting Theory
Masume Bazrafshan1*, Ghodratollah Talebnia2
1
2
Department of Accounting, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran
Department of Accounting, Science and Research Branch, Islamic Azad University, Tehran, Iran
*
Corresponding Author Email: [email protected]
Abstract
The extent to positive accounting theory has been able to achieve success with their model
the natural sciences we are concerned here. Positive accounting theory since its emergence
has always been subject to critics. This paper argues that the choice theory perspective
PAT methodology is in great difficulty, the point of which (to this day remained) a theory
is time to replace the old theory that the higher predictive power. If you did not develop a
theory with predictive power than standard theory predicts a higher power can be used in
early stages of development of a theory. It is silent on this positive accounting theory. The
paper also notes that despite the proposed accounting framework PAT study natural
science, natural sciences acquire positive accounting theory cannot succeed. Since no
accounting theory is a theory of knowledge of existing theories mother of criticisms against
them seems to be necessary to provide a comprehensive theory and mother, and research
in this area seems important and this study has been done to respond to such needs.
Keywords: Accounting Theory, Challenge, Positive Accounting.
Introduction
The objective theory of accounting is to provide a set of principles and relationships observed that accounting
operations there to explain and predict operations. In other words, in theory principles and methods of accounting
should be able to choose various reasons to explain the accounting profit units, and features units which, through
accepted methods, specific methods to adopt ago the nose. Theory through the study of accounting should be tested
or certified. Theory accounting can be classified in different ways: on the surface, which in theory it is placed
(structural, behavioral and interpretation), by way of reasoning (inductive, deductive) or the accounting position
which contains: normative grammar and positive (positive or descriptive) becomes. Coincided with the beginning of
the development of PAT test some of the basic assumptions of accounting normative theory during the 1960s. Until
the advent of positive accounting theory, accounting commands that these studies were regarded as the dominant
paradigm. Normative research of interest to theoreticians of accounting recognition and measurement of specific
issues in accounting. Accounting specific questions were asked and answered. Among the theories presented in the
accounting area PAT compared to other theories in recent years has been more emphasis in accounting literature.
The reason for this emphasis is that PAT is based on a conceptual framework has been established and experimental
content (Ahmadi, 2011).
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The term PAT in economics for research to explain and predict phenomena clean and research is aimed at
developing fiat, is used. This theory to explain and predict the behavior of companies that want to use a special
procedure is used (Watts & Zimmerman, 1990).
Methodology
In other words, the only reason to change the choice of changing the parameters of cost. The economic analysis
focuses exclusively on the fairness of the cost. When change occurs in behavior may be economically the fairness of
the fee (to be explained, but it cannot change people's behavior results) utility function to explain. This process
methodology approach as follows: The first step is to establish a clear model of the situation is the cost. The second
step is to pay attention to are people maximum) because their behavior varies according to the location and
condition of the costs (and ultimately last step, provide appropriate data to determine the model and the data model
matches (Watts & Zimmerman, 1990).
Discussion and Conclusion
Watts and Zimmerman claim that only PAT is at odds with normative accounting theory (objectively, without
bias and descriptions, so just theories PAT has value, but unlike what Watts and Zimmerman say, theories PAT to
size accounting normative theory has value. Because, as Watts and Zimmerman, express PAT outlines' accounting
procedures and theory to explain and predict the behavior of companies that want to use a special procedure and
Companies that do not want to use the specified procedure is used. So this theory solves half the problem. However,
this theory about what procedures should companies use not explain and a normative theory performs this task. The
other half is the result of action to achieve the desired status or treatment to solve the normative theory (Tinker et al.,
1982).
Krystnsvn (1983) adds that, contrary to what you say Watts and Zimmerman, one of the prerequisites for
positive research theory Accounting is not a separate theory is normative or even useful in accounting theory.
Second, the PAT is based on confusion between the realms of phenomena. Thirdly, the philosophical basis PAT
outdated, so it should not be called empirical theory governing relations between phenomena positivism because
PAT proved to be dealt with without skips, because the other case is said not ruling out a connection between the
phenomena. While we Watts and Zimmerman argue that PAT is skips them. It also can be added at the end of the
predicted theoretically easy to use, rather than predictions are wrong, because some of the results anticipated PAT
due to the limitations governing it are wrong (Christenson, 1983). Luo and colleagues (1983) have brought criticism
on this theory; the most important are as follows: PAT methodology is questionable and is not justified by Watts and
Zimmerman. Watts and Zimmerman only provides empirical evidence to support their position and provide
evidence that undermines their theories avoid. Luo and colleagues (1983) claim they can provide empirical evidence
to refute arguments Watts and Zimmerman (Lowe et al., 1983).
Aschrvdr (1984) comment on the PAT is as follows: Positivists such as W & Z difficulties and obstacles have
to differentiate between descriptive and positive. If the guidelines cannot provide proof of their theories to provide
an explanation will be powerless. This means that the main result is that the methodology of proof should be
practical question or usefulness of politically out (Schreuder, 1984).
Watts and Zimmerman gave several reasons in defense of his proof theory that we briefly describe it below.
The reasons are as follows: Custom-Oriented completely right or completely wrong no theory based on practiceoriented but untenable theory that according to the latest standards and agreements are usable as well. The criterion
for determination and selection theory is that the more established theory, easier, and the public is understandable
(Watts & Zimmerman, 1990).
Theories are not just a tool to achieve your goal, so it is enough to be useful theories So it is enough to be
useful theories and able to meet the necessary requirements and do not need theories are true (Fridman 1953).
It can be said that theories are based on ideal conditions, So in the absence of ideal possibility of rejection there
and this is not a problem for the theory, since theories have been based on, In other words, we cannot provide
theories based on the absence of ideal conditions to rule out the possibility of them does not exist, Firstly, it is the
absence of ideal, secondly, it is a handicap for the theory of non-ideal circumstances, for example if based on
practical circumstances be Because the goal of achieving ideal conditions. Moreover, the theory must always be
ahead of the action (Samuelson, 1947).
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Zimmerman (1980) says: PAT them, although the best current accounting theory, but it can be rejected.
Zimmerman tells in appearance and there is no clear scientific theories or prove truths. Indeed interpretation theory
and the theory depends fans. We cannot prove the theory right: despite the fact that there are likely to reject it. So
are the critical theories must reject them and try to prove them (Zimmerman, 1979).
The two scientists claimed that theories are necessarily incomplete as a result of skips them there and then
concluded that the most useful theory should be provided. We have to start on accounting issues at the micro level;
people explained that if people have a rational idea, without prejudice and are due issues at the micro level it is not
possible at the macro level. This is the foundation of wisdom Chicago School economists to describe the macrolevel issues vigorously. Although apparently the claim that people are able to decide alone makes sense But under
the claim that they alone are capable of decision-making is not always true because people do not always do what is
in the best interest of society. Chicago individualism expressed in any decision that is good for people is also good
for the whole community, but actions Selfish some people cannot make all people to maximize their utility function,
which in this case does not maximize the welfare of society. If the goal really is that accounting standards to help
people interested in business behavior that reflects investor interest is to be controlled. Positive accounting can be
associated with the contractual view of the firm. The firm is viewed as “a nexus of contracts” and accounting one
tool to facilitate the formation and performance of contracts. Under this view, accounting practices evolve to
mitigate contracting costs by establishing ex ante agreement among varying parties. For example, positive
accounting postulates that conservatism in accounting –in this sense defined conditionally as requiring lower
(higher) standards of verifiability to recognize losses (gains)– has origins in contract markets, including managerial
compensation contracts and lender debt contracts. As an example, absent conservatism, managerial compensation
agreements may reward managers based on current reports that later evidence indicates were unwarranted.
The contractual view of positive accounting puts it in tension with value relevance studies in accounting: the
latter contend that accounting’s primary role is to value the firm, and thus practices like conservatism are suboptimal. The value relevance school emphasizes the usefulness of accounting information to equity investors in
contrast to its usefulness in contracting exercises (Whittington, 1987).
He has (1988) states that ignore other sources of information other than the financial statements makes W & Z
lack of power develop foresight. Positive accounting emerged with empirical studies that proliferated in accounting
in the late 1960s. It was organized as an academic school of thought of discipline by the work of Ross Watts and
Jerold Zimmerman (in 1978 and 1986) at the William E. Simon School of Business Administration at the University
of Rochester, and by the founding of the Journal of Accounting and Economics in 1979. When published, the
pioneering articles were greeted with considerable criticism (Demski, 1988; Whirly, 1988).
Watts and Zimmerman in his various articles instead of answering the questions critics have tried to change
their goals so have created a quandary for all aand this is what economists call positive economics Watts and
Zimmerman (1990) show that they have been proven word to economy (Watts & Zimmerman, 1990).
Even economic leaders do not agree on the positive economics, thus accounting researchers should know
certain economic positivism. As is clear He has criticized the standpoint of economic analysis is the heart this means
that if the economic analysis used Is mentioned, at least to understand the needs and constraints of the economic
analysis with knowledge. In addition to Watts and Zimmerman had to, methodological limitations Chicago and to
promote ideological and methodological priorities criticism because it does not matter if a person wants to follow
the instructions Watts and Zimmerman and assume that market.
Sufficiently imbalance. So that the prices used to calculate the cost-benefit balance in the selection of specific
accounting procedures are available, because otherwise loss this is what Watts and Zimmerman will not pay
attention to it.
Acknowledgements
The researcher would like to thank all research participants who have contributed to the study.
Conflict of interest
The authors declare no conflict of interest
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