Questions/Drawbacks:

 Are accounting practices truly reflected?

 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