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Positive Accounting: An Assessment
Author(s) -
STERLING ROBERT R.
Publication year - 1990
Publication title -
abacus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.632
H-Index - 45
eISSN - 1467-6281
pISSN - 0001-3072
DOI - 10.1111/j.1467-6281.1990.tb00249.x
Subject(s) - scrutiny , accounting , legitimacy , positive accounting , value (mathematics) , accounting information system , general theory , positive economics , economics , political science , law , financial accounting , mathematics , statistics , politics
Positive accounting theory, using the book of the same name by Watts and Zimmerman (1986) as the primary source of information about that theory, is subjected to scrutiny. The two pillars — (a) value‐free study of (b) accounting practices — upon which the legitimacy of that theory are said to rest (and the absence of which is said to make other theories illegitimate) are found to be insubstantial. The claim that authorities — economic and scientific — support the type of theory espoused is found to be mistaken. The accomplishments — actual and potential — of positive theory are found to have been nil, and are projected to continue to be nil. Based on these findings, the recommendation is to classify positive accounting theory as a ‘cottage industry’ at the periphery of accounting thought and reject its attempt to take centre stage by radically redefining the fundamental question of accounting.