DISCUSSION ON THEORY

DEFINITION OF THEORY
-A more general and useful definition for the social sciences was provided by Kerlinger (1986): “A
theory is a set of interrelated constructs (concepts), definitions, and propositions that present a
systematic view of phenomena by specifying relations among variables, with the purpose of explaining
and predicting phenomena”
-Theories are developed to explain, describe, and analyse the situation, as well as to challenge and
improve current knowledge, all while remaining within the bounds of fundamental restricting
assumptions. The theoretical framework is the framework that holds or supports a research study's
theory. The theoretical framework introduces and specifies the theory which explains why the research
problem under analysis exists.
This definition suggests three things:
1. First, theory is logically composed of concepts, definitions, assumptions, and generalizations.
2. Second, the major function of theory is to describe and explain – in fact, theory is a general
explanation, which often leads to basic principles.
3. Third, theory is heuristic because it stimulates and guides the further development of knowledge.

A theoretical framework consists of concepts and, together with their definitions and reference to
relevant scholarly literature, existing theory that is used for your particular study.

Theories are formulated to explain, predict, and understand phenomena and, in many cases, to
challenge and extend existing knowledge within the limits of critical bounding assumptions.
The theoretical framework is the structure that can hold or support a theory of a research study. The
theoretical framework introduces and describes the theory that explains why the research problem
under study exists.
A theoretical framework comprises the theories expressed by experts in the field into which you plan to
research, which you draw upon to provide a theoretical coat hanger for your data analysis and
interpretation of results.

The theoretical framework is the structure that can hold or support a theory of a research study.

MAIN ROLES and importance OF THEORIES IN A RESEARCH PAPER

1. Theory provides significant guidelines and trails for the conduct of research by pointing to areas
that are most likely to be fruitful, that is, areas in which meaningful relationships among
variables are likely to be found. If the variables come to be selected such that no relationships
between them obtain, the research will be sterile no matter how meticulous the subsequent
observations and inferences.
2. Another contribution of theory for research is in terms of increasing the meaningfulness of the
findings of a particular study by helping us to perceive them as special cases of the operation of
 a set of more general or abstract statements of relationships rather than as isolated bits of
empirical information.
3. The linkage of the specific empirical findings to a more general concept has another major
advantage. It affords a more secure ground for prediction than do these empirical findings by
themselves. The theory by providing a rationale behind the empirical findings introduces a
ground for prediction which is more secure” than mere extrapolation from previously observed
trends.
4. Whereas an empirical finding as a proposition referring to certain concrete contextual
manifestation of a phenomenon does not afford a basis for drawing diverse inferences about
what will follow, its reformulation or revamping in theoretic terms affords a secure basis for
arriving at the inferences about the varied positive consequences in areas quite remote from
the central area to which the given finding relates.
5. In affording broader meanings to empirical findings the theory also attests to their truth. A
hypothesis is as much confirmed by fitting it into a theory as by fitting it into facts, because it
then enjoys the support provided by evidence for all the other hypotheses of the given theory.
6. Theory helps us to identify gaps in our knowledge and seek to bridge them up with intuitive,
impressionistic or extensional generalizations
7. -Theories provide complex and comprehensive conceptual understandings of things that
cannot be pinned down: how societies work, how organizations operate, why people interact in
certain ways.
8. -Theories give researchers different “lenses” through which to look at complicated problems
and social issues, focusing their attention on different aspects of the data and providing a
framework within which to conduct their analysis

The question of what makes a good theory is important to consider when a theory is useful for
research purposes
 A good theory should be a composition of well – defined concepts that allows practicality and can
be put into use.
 Good theories are clear and specific. A good theory should be simple however simplicity is
sensitive and we ought to be care when we create simple theories as the world is very complex,
over simplification can lead to a theory losing meaning and validity.
 A good theory should be believable, reasonable and logically consistent. Good theories should
contain a level of testability and falsifiability.
 A good theory should be adaptive.

STEPS IN IDENTIFYING YOUR THEORIES WHERE YOUR RESEARCH IS ROOTED

Before you consider writing your theory, choose an important topic and conduct research. Select
something of interest that you wish to share with others. The theory may be a problem with gaps in the
premise. It may also be a subject that needs updating because of new findings; it may be something the
previous author wasn't privy to when she wrote her thesis. In our case, choose a research related to
accounting, the environment of an accountant or even the accountancy profession
Examine the research problem and consider the key variables in your research. Go back to your
statement of the problem and consider the important variables.
Review the literature. Read books, journals and peer-reviewed articles. During the research, take copious
notes on ideas that you agree with. This will help you form the paper in an unbiased way. Next, jot down those
items that you disagree with and believe need clarification or will help you come up with a theory. Try to
understand each author's premise before forming your own.
Discuss the theory and its relation to your present study.
-Title of theory
-author/proponent
-theoretical principle
-relationship/relevance
THEORIES RELATED TO ACCOUNTING RESEARCH
Accounting theories
-Revolves around strategies, assumptions, procedures, and frameworks associated with the study of
financial reporting and implementations of financial reporting principles in the accounting industry.
-Accounting theory is more qualitative than quantitative, in that it is a guide for effective accounting and
financial reporting.

EXAMPLES
1. Cost Principle
 According to the cost principle of the accounting theory, all the assets should be recorded as soon as they
are acquired, whatever the asset may be.
2. Matching Principle
 It is basically about matching expenses with revenues.
 For example, wages of employees should be recorded as an expense when the employees worked and not
when the employees are paid for the work done.
3. Materiality Principle
 This principle expects that only monetary transactions that are completed are recorded.
4. Conservatism Principle
 the general concept of recognizing expenses and liabilities as soon as possible when there is uncertainty
about the outcome, but to only recognize revenues and assets when they are assured of being received.
5. Time-Period Principle
 It is the concept that a business should report the results of its operation over a standard period.
6. Consistency Principle
 This concept stresses that once a system of accounting has been decided upon, it should be followed in all
the business transactions, and changes to this system are not acceptable unless that change would result
to a more relevant and reliable outcome.
Other theories that can be applied to an accounting-related research
There are theories that might not be directly related to the preparation and studying of financial statements
but are essential in an accounting research for it involves the business, economic, management and finance
sectors which are also closely related to accounting
TAKE NOTE!
 Accounting research papers are useful not just to enhance the level of reliability and relevance of
financial statements, but also to help a particular business achieve efficient and effective operations
as well as to help in decision making pertaining to economic and financial factors.
 Thus, theories related to accounting research is not only limited to accounting principles or concepts
but also to external factors which a research problem or title stems from, may it be theories related
to economics, finance or organization.
 Accounting Research Papers can also pertain to studies on the Accountancy profession, the
behaviours and operations surrounding the accountant and the Accountancy course. Researchers are
highly encouraged to not just limit themselves with accounting theories and principle but also to
different psychological, economic, financial and organizational theories.

EXAMPLES(here are some examples of theories that can be connected to an accounting research title)
RATIONAL CHOICE THEORY- From the minds of Hoque in 2010, this is a concept for the sole purpose of
decision-making. Based on the principle of optimization, the rational choice theory will help in providing clear
insights about why and how a few sections are selective in accounting scenarios. This theory forms from the
basic contexts of finance, a branch of economics.
RESOURCE DEPENDENT THEORY- States the organizations that lack resources will establish relationship bonds
with others, in the stance of acquiring the resources needed. The concept was by Pfeffer and Salancik in 1978.
The key focus here is about a firm’s survival of its rights and duties through resource maintenance and
acquisition.
POSITIVE ACCOUNTING THEORY- Puts forth the concept that every individual will try to maximize their
utilities by managing accounting standards, only through self-interest. There might be concerns arising in the
management due to organizational constraints such as size, bonus offers, and debt plans.
THEORY OF STRATEGIC CHOICE AND MANAGEMENT CONTROL- This is a simple theory that informs about an
individual’s adaptability to an environment. The theory centres upon the idea that every action of a member
in an organization is an explanation for all the decision taken.
HUMAN RELATION THEORY- Emphasizes that aspects such as motivation, organizational structure, leadership
positions, managerial dynamics, supervision controls and more, have a close relationship with the individual’s
capability. This is a theory by Hopwood in 1979.
CONTINGENCY THEORY OF MANAGEMENT ACCOUNTING AND CONTROL- is an important paradigm in any
organizational fields. It states that the so-called ‘packages’ of management control is evolutionary and keeps
changing.Yet, there should be a mechanistic model or approach that must focus on what and what not to use.
Although this concept of ‘packaging’ has a few criticisms due to empirical absence, this theory has scope for
future applications, when it takes specific organizations into account instead of a generalized one.
AGENCY THEORY- Jensen and Meckling formed the Agency Theory of accounting in 1976. Taking the
perspective of the principal and agent, this is a framework denoting an organizational process. Corporate
Governance (CG) and Financial Reporting Quality (FRQ) uses this theory to understand an association of the
former and latter.
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