Does it provide a clearer picture since it focuses on what and how accounting practices should be?
Positive Accounting Theory
Seeks to explain and predict
Based on scientific reasoning not observations Popularized in economics by Friedman (1953) Popularized in accounting by Watts and Zimmerman (1990) Assumes: Markets driven by self-interest Organizations will seek to align managers interests with owners’ interests: Legitimacy theory Stakeholder theory
Critical Perspective Research
History of accounting –complex web of economic, political and accidental c-occurences
View of mainstream accounting: Unduly influenced by utility-based view Accountants take as given the current institutional framework Accounting serves to aid certain interest groups to the detriment of others People are not seen as makers of their own social reality
Assumptions in Critical Perspectives:
Society has the potential to be what it is not Conscious human action is capable of molding the social world to be something different or better Assumption 2 can be promoted by using critical theory