The Nature of Accounting Research - Essay Example

Topic: The Nature of Accounting Research Research is an important aspect that can be used in different fields and disciplines. Research seeks to understand why problems, issues occur, and what are the reason for the occurrences. Different theoretical approaches are used to help in doing the research and applying the theories in exploring the issues. Thus, the aim of this paper is to analyse accounting research based on two theories, which are positivist approach and critical approach. Positivist approach to research is a theory that states that the scientific method is the better option to unveiling epistemological ideals and philosophies of science in how physiological and human events happen. It emphasizes the need to use sense and affirmative verification in search for true knowledge (Adorno, 1966). The concept was conceived by the philosopher and founding sociologist Auguste Concept in the 19thC.The theory can be explained away by various principles; it indicates that the logic of inquiry is a uniting factor among sciences, be it social or natural (Holmes, 1997). It also verifies that the major reason for research is to create understanding by creating factors that provide conducive environment for a particular event i.e. if facts are known, one can easily influence the factors to produce the predicted result (Moses, 1987). The concept also states that science can be tested through hypothesis and observation by use of human sense and that a researcher should not allow their common sense influence their research (David, 1980). Finally, the concept implies that science should be purely done to create knowledge despite the political, social, or moral ideals held by the researchers because statements must stay factual any time and in any place (Dye, 1988). Critical approach to research is a theory that implies that a researcher shall critically analyse their findings against those of fellow researchers by questioning every single findings they have until they have enough data/evidence supporting their thesis to come up with quality outcomes (Moses, 1987). This helps the researcher identify and distinguish between good, bad findings by identifying fault in arguments, analysis, and the methods used (Adorno, 1966). Critical research approach dwells on the oppositions of things, occurrence of conflicts and contradictions in the day-to-day life in the society, it focuses more in finding faults (Robert, 2004). In modern world, accounting is a key element in the daily running of business, organizations and institutions. Weather an institution is profit oriented or not, it needs to keep its account book in order thus the need for accounting research (Dye, 1988). Accounting research has been formulated to help in managerial practices in helping identify sources of problems by eliminating causative elements and providing solutions to the same. Accounting research has been used to gauge how efficient managers are (Moses, 1987). The theory seeks to explain how they would choose an accounting research methodology that would give a clear representation of the institution’s financial and equity performance (Adorno, 1966). The hypothesis is that managers who accrue added benefits or annual remuneration that is determined by a company’s good or bad financial performance, is more likely to interfere with an accounting methodology for the figures to favour him/her (Dye, 1988). The use of Positivist approach to accounting research has been used to explain how things happen by observing past happenings and predicting the most probable expected results (David, 1980). In a positivistic approach, the researcher seeks to understand the causes and the effects thereof i.e. the forces ad determinants towards a particular phenomenon e.g. a financial recession. A researcher would seek to find what caused the 1930’s financial recession and compare it with 2009 financial recession in order to come up with an argument to support such considering the factors remain constant, thereby predicting when such a case will arise again. In accounting research, one may use positivistic approach if it solely wants an objective explanation because that is what the positivistic approach goal is (Dye, 1988). In a social setting, the theory sets social control, implies that it is rational, and moves towards establishing integration in the society (Richard, 2007). A firm will however, opts to use the critical approach in its accounting research in order to establish and challenge assumptions on why people may perceive, conceive or even act a certain way (Adorno, 1966). Rather than a positivistic approach who accepts things as they are since the theory states that action is always rational and that rules and norms are created to create integration and they are created for the common good (Robert, 2004). A critical approach will be used in situations where or when they may actually interrupt what is considered normal routines and the known way of doing things in pursuit of exploring and discovering other hidden alternatives (David, 1980). For example a company that has solely relies on its auditors previously, may venture into modern technology (Kieran, 2006). It may update its accounts using software, despite the anomalies that may occur thereof, if it means getting more accurate information or cutting off expenses that a firm may do without e.g. paying auditors for various departments when new technology can ease that. Accounting research has been done to rule out the possibilities of managers who have opportunistic intentions (Hanson, 2008). Whereby they implement accounting methodology that helps them to gain as the institutions also gains. Their motives make them prefer an accounting policy to the other. In this case, critical approach will be used because it will help to establish how a manager’s belief and his actions may be influenced by history, social status and culture (Dye, 1988). This is because critical approach may again go beyond finding faults and seek to understand w things happen the way they do. Firms in corporate world have been known to evade taxes (Adorno, 1966). Even worse, is that they incorporate in their systems accounting methodologies that shows that they have accrued lesser annual profits than they really have in order not to attract attention of the government who tends to place tight and tougher regulations on high earning firms than low profit making firms. This is more so especially, if they are foreign companies (Richard, 2007). In this case, the critical approach to accounting in research is used since it is more sceptical about any knowledge or information or even a solution that may be deemed as ordinarily truth or as the alternative (Dye, 1988). Financial and lending institutions depend on accounting research to identify firms that they can lend to and get their value back without a hustle. A firm registering good annual profits is more likely to lead than a firm that is not (David, 1980). Managers therefore, will prefer to use accounting policies that shows good earnings and profits with good liquidity position to pay interest on the debt and the principle. This means he will more likely choose a methodology that would increase the profit to rhyme with the high equity or loan level (Richard, 2007). Positivistic approach is used in this case to answer the pivotal question, why they do it and find out the causes, which influences an individual or a group (Robert, 2004). By so doing control an individual or even a group in order to reinforce order. In this approach, offenders deviate and are known as such and enforcement is done for maintaining order. According to Sir David Tweedie, Chairman of the International Accounting Standards Board it is better to be roughly right than precisely wrong (Hanson, 2008). He meant that high quality, principle based accounting standards are designed to establish what is appropriately right – to provide a range of answers that are roughly right, rather than a single number that is precisely wrong, this seems to favour the critical approach which answers important questions in depth than positivist would (Adorno, 1966). This is particularly so in establishing the whys and the how. Why and how various results were achieved, and not just what the results were, but also addressing other significant issues of relevance, the unforeseen effects and the implications of policies (David, 1980). For instance, in a firm’s annual financial statements, the approach would seek to find out; were the annual expectations reasonable, did the operations run as they were meant to, did the personnel obligated with various responsibilities able to execute their duties as stipulated, what were the implications and impact of various policies introduced to the normal running of the firm. Critical approach is best suited because it allows diverse responses, and has the advantage over positivistic approach in that, it has the ability to adapt to new changes and developments as they may occur during the research process (Dye, 1988). Although the critical approach is more costly and may require a lot time to conduct it, most researchers prefer to use its techniques, for they have repeatedly provided fact proof, cost-efficient and up to date results. Critical approach to accounting seeks to verify and offer solutions rather than just find causes as positivistic would (Hanson, 2008). Positivistic approach is however, cannot be completely written off .This is considering that its methodology is majorly preferred, in that, it is more representative, can be relied on and give more accurate and thorough data or solutions due to its focused hypothetical analysis, research tools and applied mathematical equations (Adorno, 1966). Contrary to data collected using critical approach theories, which are hard to chart, draw or even give in mathematical forms. Positivistic approach identifies with the belief that science has a unifying factor in all scientific disciplines; this is majorly true because it can be used in Law, Accounting, Sociology, and Physiology among many others. It also has the belief that a researcher can disassociate his or her moral, political or social values from the research process they are undertaking, thus giving very objective results (David, 1980). Production, synthesis and construction of communication, beliefs, cultural and social tendencies in human society, which has evolved over time (Hanson, 2008). Be it through universal pragmatic principles, daily human trends, or even how psychological elements are generated everyday, they all realign themselves to understanding the linguistic or symbolic kind, that helps in observing phenomena as they happen. Language and communication has played a key role in developing theories and research in the philosophy of language and analysis, structural linguistics, hermeneutics among others (David, 1980). This led to redefining the theory in the late 1970’s and early 1980’s as the communication theory, this was more so to represent the communicative competence and communicative rationality against the distorted communication (Richard, 2007). Critical approach has been used in legal science; it indicates that contrary to common knowledge, legal elements do not necessarily determine the rulings to legal disputes (Richard, 2007). This means that although paralegals are under substantive rules, it may not influence a particular ruling for a particular case (David, 1980). More often than not, the critical approach has implied that judicial matters are influenced by legislative acts asserting that the two are intertwined and they work together. The critical approach also affirms that the law tends to swing to the interests of the well o do in the society, however, what the law states, it does not (Max, 1966). Nevertheless, it does not mean it can be used as a tool for social injustices. Positivistic approach was what was greatly used in the early 19th Century but has been highly criticized. However, it has been used in accounting research to seek explanations and predicting actual and valid accounting practices. It does not however seek to formulate and give averaged accounting standards (Max, 1966). The approach in regards to accounting implies that accounting is done as a tool primarily to help pace a value on the institution or the firm. It also helps in offering quality information to potential investors rather than offer valid elements in conducting contractual exercises with the firm’s managers or personnel (David, 1980). Although positivistic approach has the ability to offer sufficient and reliable data in regards to accounting, it has been highly criticized. It does not deal with provision of solutions and prescriptions to problems, nor does it indicate what should happen (Hanson, 2008). It indulges more in explaining and estimating what is likely to occur, this in itself is not sufficient for a researcher who would like to find possible solutions to issues and problems (Dye, 1988). Scientist have argued over time that it is costly and yet it does not give definitive answers to specifics problems, i.e. it give explanations and predictions of what people may do, and not giving remedies on what they should do. The positivistic approach to accounting research tends to assume that people in authority are opportunistic (Max, 1966). That their main agenda is to increase their profits with no considerations to the possible affects that may arise from their actions. In conclusion, though positivistic approach has been the foundation to most of the research done in modern society will more often than not rely more on the critical approach to accounting research. Critical approach digs deeper and provides answers. Its research relies more on evidence rather than hypothesis. References Adorno, A.B. (1966). History in Critical Theory. London: Duke University Press. David, H. (1980). Introduction to Critical theory. Los Angeles: University of California Press Dye, N.A. (1988). Impact of Accounting Research. London: Duke University Publishers. Hanson, B. (2008). Wither Qualitative/Quantitative? Grounds for Methodological Convergence. Quality and Quantity, 42, pp. 97-111. Holmes, R. (1997). Genre analysis and the social sciences: An investigation of the structure of research article discussion sections in three disciplines. English for Specific Purposes, 16(4), pp. 321-337. Max, H. (1966). Positive Accounting Theory. Canberra: New York Publishers. Moses, D.G. (1987). Positive Accounting Theory. New York: New York University Press. Richard, M. (2007). Two Hundred Years of Accounting. London: Stanford Press Robert, L.P. (2004). Financial Accounting. Canberra: New York University Publishers. Kieran, J. (2006). Approaches in Critical Theory. New Delhi: Sterling Publishers Read More