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Accounting Theory

and Accounting
Research

Nyoman Ardiantha Putera R.M./344132


Muhammad Heickal Pradinanta/350168
Scientific Method

A body of technique for investigating


Phenomena, acquiring new knowledge, or
correcting and integrating previous
knowledge. A theory, that must contain a basic
set of premises (assumptions or postuiates)
Research Approaches
Deductive Reasoning: Logical reasoning is
used.

eg: Premise 1= Snakes are reptiles

Premise 2= Reptiles are cold-blooded

Conclusion= Snakes are cold-blooded


Inductive Reasoning: analyzing the logic of a
set of sentences not simply by its internal
logic.

Eg: The cost of goods was $2.00. The cost of


labor was $1.00. The sales price is $6.00 per unit;
so the item always provides good profit.
Normative (prescriptive)
Theory
Employ a value judgement, containing at least
one premise saying that this is the way things
should be

eg: Conceptual framework

Deductive system are often normative.


Descriptive Theory
Attempt to find relationships that actually
exist. Inductive approaches usually attempt to
be descriptive
Global and Particularistic
Theories
Global (macro) theories
Deductive reasoning

Particularistic (micro) theories


Inductive reasoning
Directions in Accounting
Research
1. Decision-model approach

2. Capital market research

3. Behavioral research

4. Agency theory

5. Information economics

6. Critical accounting
The Decision-Model
Approach
Asks what information is needed for making decisions

Does not ask what information users want

Orientation is normative and deductive

The main decisions embraced by the decision-model


approach:

1. Enabling the user to better predict future cash flows

2. Analyzing the efficiency and effectiveness of


management
Capital Market Research
Efficient-Markets Hypothesis (EMH) : market
prices reflect fully all publicly available
information

EMH has significant implications for


accounting

Difficult
Behavioral Research
Focus on how users of accounting information
make decisions and what information they
need
This approach is descriptive or positive
Divided into 2 types:
1. Behavioral
2. experimental
Agency Theory
Deductive/Inductive

Enterprise as the locus or intersection point


for contractual-relationships

(eg: management, owners, creditors, and


government).

Concerned with various cost of monitoring and


enforcing relations among the group.
Information Economics
Analytical/deductive

To determine how contractual arrangement


incentives and risk sharing can be negotiated
Critical Accounting
Concerned with the active social role of
accountant

An Amalgamation of public interest accounting


and social accounting
THANK YOU!