Critical accounting theory Essay Example For Students

Critical accounting theory Essay Outline1 Introduction2 Philosophic grounds3 Practical grounds4 Example theories5 Theory 1: Positive accounting theory6 Theory 2. Critical accounting theory7 Mentions Introduction There are several grounds there is no 1 universally accepted theory of accounting. The grounds are of two kinds. The first is philosophical. The 2nd is practical. This essay discusses each of these. It so provides illustrations from accounting theory. Philosophic grounds The statement There is no universally accepted accounting theory is true by definition. Scientific apprehension of the term theory denies that any theory can be universally accepted. Harmonizing to Popper ( e.g. , 2002a, 2002b ) , theories are speculations that are put to the trial. If they are refuted by the trial, they are either rejected or refined. If they are non refuted, they remain theories ( non facts ) . They are so set to farther trials, and are farther refined. In order for this to continue, there must be rival theories. In this manner, theories compete in a procedure of Darwinian choice. The theories neer get to the truth , but they get increasingly closer. This is the first ground there is no universally accepted theory of accounting. If there were a universally recognized theory of accounting, it would nt be a theory. It would be something else. Notice that, harmonizing to Popper, no theory of all time arrives at certain cognition. The best any theory can make is restrict ignorance. Furthermore, if scientists were to detect a true theory , there would be no manner they could cognize it was true, so at that place would still be viing theories. This last point demands amplification. G A ; ouml ; del s rawness theorems ( see, e.g. , Hofstadter, 1979 ) demonstrate that, in any system of logic rich plenty to incorporate formal arithmetic there exists an infinite figure of statements that are true but that are impossible, in rule, for the system to cognize to be true. This means, in practical footings, that in any complex system-for illustration, an economic system-there exist solutions to jobs that are known by the system, but are non known by any person within it. This is appreciated by taking economic experts ( e.g. , Hayek, 1979 ) . Further, given that there exist normally boundlessly more incorrect solutions to jobs than right solutions to jobs, any effort to work out such jobs by diktat is boundlessly more likely to take to failure than to success. As respects economic sciences, this led Hayek ( 1944 ) to his bridal of the free market. As respects theory in scientific discipline, it means that any effort to enforce a i ndividual theory on anything is likely to take to a earnestly incorrect theory. This is another ground for believing there can be no universally accepted theory of accounting. Any universally accepted theory could merely be universally accepted if it were imposed by diktat, and, if it were imposed by diktat, it would of necessity most likely be incorrect. Therefore it would give rise to a rival theory. Related to this, Feyerabend ( 1996 ) argues that there is no such thing as a individual scientific method, and that any effort to enforce one is counter-productive. Feyerabend s doctrine of scientific discipline is summarised as anything goes . This, provides another ground for there being no individual theory of accounting. If there can be no universally accepted method, there can be no universally accepted theory. There are two popular positions of scientific discipline that are in struggle with Popper s position: positivism and postmodernism. Positivism is the doctrine, associated with Ayer ( 1946 ) that says that the lone meaningful statements are those that are true by logic and those that may be verified by observation. This is the confirmation rule. The first job with the confirmation rule is that it is neither a truth of logic nor an through empirical observation verifiable fact, hence by its ain footings it is nonmeaningful. The 2nd job is that in implies science returns inductively. But inductive logic ( pulling general decisions from specific cases ) is flawed: a million observations of white swans, for illustration, does non show that all swans are white ( so, they are nt: some swans are black ) . Postmodernism is the doctrine that world is socially constructed. So what is existent to one individual may be unreal to another. At a fiddling degree, this is true, for different people see the same things in different ways. It is besides true that, historically, scientific discipline progressed in some cases by alterations in universe position, or paradigm ( Kuhn, 1996 ) . However, this is a inquiry more of the sociology of scientific discipline, non of ontology. And taken literally postmodernism is absurd. It leads to the decision that there is no such thing as world. Core Business Strategy Of Thomas Cook Commerce EssayBut the impression of H. economicus is problematic-some people are stupid, some are selfless, and so on ( Lunn, cited in Clark, 2008 ) , The EMH is besides combative. Some economic experts accept it, others do nt. The EMH is besides obscure. If the market is efficient, the EMH does nt state how long it takes to make a determination Besides, if the EMH were true, arbitrage would be impossible. The best 1 can state about the premises is that they provide an estimate of world. How good an estimate it is, cipher knows. This is another ground there is no universally accepted theory of accounting. Some people think the premises provide a good estimate ; some people think they provide a bad one. Fama and French ( 2004 ) province that markets can be inefficient and investors can be ill-informed and irrational, Merely as proprietors, authoritiess, and workers have vested involvements, so have Watts and Zimmerman. In their instance, they are interested in advancing positive accounting theory. So, in this respect, the theory has a normative facet. It concerns how accountancy research workers should pattern their trade. If all research workers follow Watts and Zimmerman s diktats, Watts and Zimmerman will go rich. Naturally, all accounting research workers want to be in Watts and Zimmerman s place, but the lone manner for them to make so is to develop a rival theory. This is another ground there is no universally accepted accounting theory. Theory 2. Critical accounting theory Critical accounting theory is nt truly a theory. It s more a manner of unfavorable judgment. It aims, non merely to change accounting pattern, but to alter society ( Gaffikin, 2008 ) . It is political. Therefore, for illustration, Laughlin ( cited in Davis, 2008 ) provinces: A critical apprehension of the function of accounting procedures and patterns and the accounting profession in the operation of society and administrations with an purpose to utilize that understanding to prosecute ( where appropriate ) in altering these procedures, patterns and the profession. In this, critical accounting theory is postmodernist. Postmodernists point to the legion defects in positive accounting theory. They highlight the failings in the constructs of H. economicus and the EMH. They point out that Watts and Zimmerman use rhetorical devices to set the positions across. They argue that the methodological analysis and mensurating instruments of rationalist theories are rough, and so on. Occasionally, they make ( or repetition ) good points ( e.g. , the EMH is wrong ) ( e.g. , Mouck, 1992 ) . As indicated, postmodernists deny the being of nonsubjective world. In making so, they deny the possibility of finding the truth, or worth, of any statement. Therefore they deny the truth, or worth, of postmodernism. This is the job with postmodernism. If world is socially constructed, so there can non be a universally recognized theory, for socially constructed world differs harmonizing to who is making the constructing. A true theory to one postmodernist is a false theory to all others. That is why there is no universally accepted theory of accounting. Mentions Ayer, A.J. ( 1946 ) . Language, truth and logic. ( 2nd ed. ) . London: Gollancz. Clark, T. ( 2008, November 1 ) . Market lunacy. The Guardian. Davis, D. ( 2008 ) . Critical accounting theory. Lecture 9. Lecture notes. Bangor Business School. Feyerabend, P. ( 1996 ) . Against method: Outline of an anarchistic theory of cognition. San Francisco, CA: Analytic Psychology Club of San Francisco, Fama, E.F. and French, A.R. ( 2004 ) . The CAPM: Theory and Evidence. On line: hypertext transfer protocol: //www.econ.sdu.edu.cn/jrtzx/uploadfile/pdf/Assetpricing/04.pdf Gaffikin, M. ( 2008 ) . Accounting theory: Research, ordinance and accounting pattern. Gallic Forest, Australia: Pearson Education. Hayek, F. A. ( 1979 ) . Unemployment and pecuniary policy. San Francisco: Cato Institute. Hayek, F. A. ( 1944 ) . The route to serfdom. London: George Routledge Hofstadter, D. ( 1979 ) . G? del, Esther, Bach: An ageless aureate plait. Harmondsworth: Penguin. Kuhn, T. ( 1996 ) . The construction of scientific revolutions. Chicago: University of Chicago Press. Mouck, T. ( 1992 ) . The rhetoric of scientific discipline and the rhetoric of rebellion in the narrative of positive accounting theory. Accounting Auditing, and Accountability, 5 ( 4 ) : 35-56. Popper, K. ( 2002a ) . Unended pursuit. An rational life. London: Routledge. Popper, K. ( 2002b ) . Speculations and defenses. London: Routledge. Watts, R.L. And Zimmerman, J.L. ( 1978 ) . Towards a positive theory of the finding of accounting criterions. Accounting Review, 53: 112-132.