Professional Documents
Culture Documents
2
Accounting Theory
Construction and
Methodology of
Accounting
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Pragmatic theories
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Pragmatic theories
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Pragmatic theories
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Pragmatic theories
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example
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Normative theories
• 1950s and 1960s ‘golden age’
– policy recommendations
– what should be
– concentrated on deriving:
• true income (profit)
• practices that enhance decision-usefulness
– based on analytic and empirical propositions
Financial
Financial statements
statements should
should mean
mean what
what
they
they say
say
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Normative theories
• True income:
– a single measure for assets
– a unique and correct profit figure
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Normative theories
• Decision usefulness:
– the basic objective of accounting is to aid the
decision-making process of certain ‘users’ of
accounting reports by providing useful accounting
data
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Normative theories
The decision process
Accounting
Accounting Prediction
Prediction Decision
Decision
system
system of
of model
model of
of model
model of
of
company
companyXX user
user user
user
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Positive theories
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Positive theories
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Different perspectives
• Scientific approach:
– has an inherent assumption that the world to be
researched is an objective reality
– is carried out by incremental hypotheses
– has an implied assumption that a good theory
holds under circumstances that are constant
across firms, industries and time
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Different perspectives
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Different perspectives
• Naturalistic approach:
– implies that there are no preconceived
assumptions or theories
– focuses on firm-specific real-world problems
• Naturalistic research starts from specific real-
world situations; the main intention is to
answer the question “what is going on here” ,
not to provide generalisable conditions for
wide segments of society
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Different perspectives
CATEGORY
CATEGORY ASSUMPTION
ASSUMPTION
1.
1. Reality
Realityas
asaaconcrete
concretestructure
structure
2.
2. Reality
Realityas
asaaconcrete
concreteprocess
process
3.
3. Reality
Realityas
asaacontextual
contextual field
field of
of information
information
4.
4. Reality
Realityas
asaasymbolic
symbolic discourse
discourse
5.
5. Reality
Realityas
asaasocial
social construction
construction
6.
6. Reality
Realityas
asprojection
projection of
of human
human imagination
imagination
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Different perspectives
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Different perspectives
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Misconceptions of purpose
• Make scientists out of accounting practitioners
• Researchers = practitioners
• The desire for ‘absolute truth’
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Summary
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