Criticizing positive accounting theory

• Published in: Contemporary accounting research 1992-10, Vol.9 (1), p.142-170
• Main Authors: BOLAND, LAWRENCE A., GORDON, IRENE M.
• Format: Article
• Language: English
• Subjects: Accounting; Accounting procedures; Accounting theory; Criticism; Economic models; Economics; Philosophy of science; Science
• ISSN: 0823-9150; 1911-3846
• DOI: 10.1111/j.1911-3846.1992.tb00874.x

. One theoretical approach recently emphasized in the accounting literature is positive accounting theory. Synonymous with this theoretical view are the 1978 and 1979 articles published by Ross Watts and Jerold Zimmerman. These two articles prompted criticism from three different perspectives. There are critiques that refer to technical research methods problems, critiques concerned with philosophy of science issues, and critiques centered on the limitations of economics‐based accounting research. In their 1990 article, Watts and Zimmerman responded to most of the published critiques. They specifically claimed that methodological criticisms have failed to have any influence on accounting research. This paper provides a critical examination and assessment of these alleged failures by examining two types of critiques, economics‐based critiques and those based on issues of the philosophy of science. The critiques discussed include those to which Watts and Zimmerman responded as well as several other critiques that either Watts and Zimmerman failed to discuss or that were not published until after their 1990 article appeared. Positive accounting theory is shown to be applied economic positivism. Tracing the historical background of positive accounting research through its economic roots shows that the “positive” aspect of the Watts and Zimmerman approach is more rhetoric than methodology. It is argued that positive accounting theory does represent a problem shift toward a domain of research that is appropriate for Chicago School economics. A review of the published critiques of positive accounting theory shows that although critiques based on philosophy of science may not be very effective, economics‐based critiques that emphasize the limitations of equilibrium‐based economic analysis offer a promising avenue for methodological critiques of positive accounting theory. Résumé. Parmi les publications relatives à la comptabilité, celles qui touchent la «théorie de la comptabilité positive» attiraient récemment l'attention. Ross Watts et Jerold Zimmerman, dans leurs articles publiés en 1978 et 1979, adoptaient l'équivalent de ce point de vue théorique. Ces deux articles ont soulevé les critiques, dans trois perspectives différentes. Certaines critiques portent sur le problème des méthodes techniques de recherche, d'autres ont trait aux questions relatives à la philosophie de la science et d'autres encore sont centrées sur les limites de la recherche comptable qui