The essay aims to conduct a critical analysis of the article ‘Half a Defence of Positive Accounting Research’ for evaluating the strengths and weakness of the article. The research topic is about examining and analysing the concept of positive approach used in accounting research. The aim of the critical analysis is evaluate the main points illustrated in the article about the research topic. The overall research study is based on argument ‘to what extent has positive accounting theory proved to be useful in achieving scientific objectives of accounting research’. The research paper has presented a detailed qualitative analysis on the research topic of positive accounting research. In this regard, the essay has undertaken the critical analysis of the article through examining each and every section of the research study (Dunmore, 2009). The critical analysis of the research article is carried out through summarising the main points, identifying the research question, discussing the theoretical framework and evaluating the significance and limitations of the article.
Summary of the Article
The present section of the critical analysis has summarised the major points of the research article. The research article has presented the contribution of positive theory in broader accounting research programs and has highlighted its shortcomings to be used in future context in accounting field. The term ‘positive accounting theory’ was developed by Watts and Zimmerman for the theory established by them to be used in accounting researches. The theory from its development was recognised to be highly important in conducting accounting researches as it was based on natural science phenomena (Chatfiel. and Vangermeersch, 2014). The theory was based on phenomena of natural sciences was thought to be largely effective in explaining cause and effects relationships of human behaviour. The author in the research article has analysed the ontology and epistemology of positivist research program. The author has evaluated the use of positivist theory for statistical hypothetical testing and analysed its scientific basis on popper’s falsification criterion. The author has depicted the deficiencies of positivist research program and thus has criticised the theory to be used in accounting researches. The author has concluded that although positivist research program is potentially very powerful but its limited practical implementation is the main deficiency of the theory (Dunmore, 2009).
The theory of positive accounting is largely been used in accounting researches currently but it is incapable of achieving its scientific objectives. The theory was although believed to be based on principles of natural science but its incapability to achieve quantitative accounting results has questioned its credibility. The theory has not yet proved to be useful in demonstrating empirical evidences for accounting phenomena (Gaffiki and Aitken, 2014). Thus, the theory of positive accounting has not served it purpose well with which it was developed and thus there still exist a need for development of better theoretical models in accounting field. Thus, the author has highlighted all of the above points in the overall research study through varying perspectives of different authors (Dunmore, 2009).
The main research question as identified for the research study can be stated as follows ‘Does positive accounting theory adequately meets the needs and objectives of scientific accounting researches? In the context of this main research question, the study also aims to provide an answer to the following sub-research questions:
- What are the strengths and weaknesses of positive accounting theory to be used in broader accounting research programs?
- Does currently used positive accounting theory needs modifications for adequately meeting the scientific objectives of accounting research?
- Does the use of positive accounting theory in accounting researches should be limited due to is deficiencies in practice?
All the above research questions have been extracted from the critical analysis of the literature review of the research article (Dunmore, 2009).
The theoretical framework of the research article has developed from the quantitative analyses carried out in the research study. The qualitative analysis is carried out through the collection and examination of various secondary literary sources related to the research topic. The author has examined the views and opinions of previous researchers on the research topic for achieving a specific answer for the research questions of the study. As analysed from the literature review of the article, the positive accounting theory is based on natural science principles and thus can effectively explain the reality of accounting practices. The theory was mainly developed to provide an explanation of the accounting practices and phenomena for developing an understanding of the reality of accounting (Ghnabari et al., 2016). This was responsible for the widespread implementation of positivist theory in accounting researches. The accounting researches mainly involve demonstrating empirical evidences against an observed accounting predictions and this is possible through the implementation of theoretical models able to explain quantitative phenomena (Wickramasinghe and Alawattage, 2012). However, positivist theory seems to be incapable of explaining quantitative accounting phenomena and thus does not seem to be useful in carrying out accounting researches (Dunmore, 2009).
The major deficiencies of positive accounting theory as illustrated through the research article are it involves the use of theories for examining accounting phenomena rather than incorporating the use of practical testing. The theory of positive accounting cannot be tested on practical basis for evaluating their usefulness in conducting empirical accounting researches. The theory does not incorporate the logic of hypothesis testing a thus cannot demonstrate practical evidences against an observed accounting prediction identified through the accounting research. The accounting solution proposed through accounting researches needs to be supported by empirical evidences for their use in practice (Kabir, 2007). However, the theory of positive accounting seems to be incapable in demonstrating empirical evidences against an proposed solution for an accounting problem. This was the reason for the widespread criticism of the positive accounting theory and accounting researchers are presently questioning the reliability of the theory (Burns, and Needles, 2014).
The theoretical framework of the research article has also examined and analysed the scientific basis of positive accounting theory on the basis of Popper’s falsification criterion. The falsification criterion proposed by Popper has proposed the criteria on the basis of which a theory should be accepted as scientific. The falsification criterion states that predictions proposed by the scientific theory should be quantitative in nature in order to be tested practically. However, the theory of positive accounting cannot be tested practically and thus its acceptance on scientific basis is questioned. Thus, the falsification criterion proposed by Popper has also stated that positive accounting theory cannot be accepted a scientific theory. The theory of positive accounting can be used for conducting researches based on social science principle and thus rather incapable of carrying out scientific based accounting researches. Thus, the research article have analysed and examined the deficiencies of positive accounting theory though the help of available secondary literary sources on the research topic. The theoretical framework of the research article has recommended the use of better theoretical models in accounting research for attaining scientific objectives of accounting research. Also, the author through the research article have proposed that positive accounting theory should be used in combination with other theoretical models based on scientific philosophy for attaining accounting researches objectives (Dunmore, 2009).
Significance and Limitations of the Article
The research article is highly significant as it has emphasised on the use of better and improved theoretical models based on scientific philosophies for conducting accounting researches. The research study will prove to be of extreme importance in accounting filed as it will help in improving the validity and credibility of accounting researches. The accounting researchers will tend to adopt better theoretical models as compared to positive accounting theory for conducting accounting researches. The research study has highlighted that current practice of positivist research in accounting is not capable for meeting its objectives. The theory rather needs modification or should be used in combination with other theories for adequately meeting the objectives of empirical accounting researches (Dunmore, 2009).
The views and opinions of different authors illustrated in the research article about positive accounting theory have held in developing an in-depth understanding of the theory deficiencies. The research article will help in development of better accounting theories based on empirical evidences that can effectively conduct accounting researches. The research study was able to develop answer for the research questions proposed through presenting quantitative data in context of all the research questions. The research study will help the business organisations to resolve their accounting issues by developing better theoretical models in field of accounting. Business organisations currently incorporate the use of positive accounting theory for resolving their complex accounting issues. The identification of the shortcomings in the theory and development of better theoretical models will help in enhancing the performance of business organisations through selection of a proper accounting method. Thus, the research study proved to be highly significant for enhancing the performance of business organisations through selection of a proper accounting method proposed by accounting researches (Dunmore, 2009).
The research article also have some major limitations that can impact its credibility to be used in future researches held in this context. The major limitation of the research article is that lengthy and complex qualitative analysis. The research methodology adopted by the author in the article is qualitative in nature and has not incorporated the use of any quantitative data. As such, the research study lacks empirical evidences for supporting the theoretical conclusions. Thus, the research study lacks reliability as it has not incorporated the use of practical evidences for supporting theoretical findings. The research methodology selected by the author is not suitable as per the nature of the research topic. The nature of the research topic is objective in nature however, the research study conducted in subjective. The research study lacks objectivity in absence on any quantitative analysis for supporting the theoretical conclusion drawn at the end of the research study (Dunmore, 2009).
The research study has effectively meets its aims and objectives by presenting a detailed qualitative analysis on the research topic. The qualitative analysis conducted by the author presented the answer for all the research questions developed. However, the author should have incorporated the use of quantitative analysis for developing an accurate answer for the research problem. The quantitative research methodology would also have enhanced the credibility and validity of the research to be used by future researchers. The research article besides these limitations has effectively carried out its purpose of illustrating the major deficiencies in practice of positive accounting research.
Burns, J. O. and Needles, B.E. 2014. Accounting Education for the 21st Century: The Global Challenges. Elsevier.
Chatfield, M. and Vangermeersch, R. 2014. The History of Accounting (RLE Accounting): An International Encylopedia. Routledge.
Dunmore, P.V. 2009. Half a Defence of Positive Accounting Research.
Gaffikin, M. and Aitken, M. 2014. The Development of Accounting Theory (RLE Accounting): Significant Contributors to Accounting Thought in the 20th Century. Routledge.
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.
Kabir, H. 2007. Positive Accounting Theory and Science. Journal of CENTRUM, pp. 136-149.
West, B.P. 2003. Professionalism and Accounting Rules. Routledge.
Wickramasinghe, D. and Alawattage, C. 2012. Management Accounting Change: Approaches and Perspectives. Routledge.