The perspective taken by those who follow the Political Economy Theory is one which questions the use and value of such disclosures in society. The Political Economy has been defined by Cunningham (2006), as "the social, political and economic framework within which human life takes place." (1) Political Economy Theory, therefore, focuses on the idea that social, economic and political issues all have a bearing on the other and one issue cannot be successfully evaluated with the incorporation of its effects on the other two issues…
..that are taken for granted in current accounting research".
Political Economy Theory (PET) is divisable into two broad streams of thinking. One being the Classical Political Economy Theory, the other, Bourgeois Political Economy Theory. For the purpose of this writing the Classical Approach will be the main focus. Classical Political Economy Theory follows the basic ideas of P.E.T, but goes further in its bid to highlight and scrutinise structural conflicts and inadequacies within society. The followers of the Classical approach are of the strong opinion that within society even in these modern and seemingly liberal times, a class divide is still very apparent. This theory is based around the works of such philosophers as Karl Marx and therefore opposes the very basis of the Capitalist system. In the writing of Howieson (2006) it is stated that "a Classical Political Economy places structural conflict, inequality and the role of the state at the heart of the analysis".
The Critical Perspective is a branch of the Classical Political Economy Theory. ...
Critical theorists do not simply question which methods of accounting should be used, instead they investigate the role accounting as an entity takes within society and cast doubt upon the very underpinnings of the profession. In order to understand the critical theorist's view of unregulated corporate disclosures, the bigger picture of their theory must be investigated. The basis for most of the Critical theorists judgements is based upon the idea that "most rights, opportunities and associated power resides in a small (but perhaps well defined) elite," Deegan (2000). They believe that power is not spread evenly throughout society and is not something one can easily acquire but is instead controlled by this so-called "elite". Included in these elite are those who are already in power and who use this power to remain in such a position while also keeping those without power in a position where they will not be able to achieve power.
The Critical view is that these elite will inevitably wish for their own good to maintain the status quo, which is already in existence and is to their benefit. If these powerful individuals were to work towards giving more opportunities to those without power it would decrease their own power level, and, in effect, their social standing. The only people who would benefit from the radical reforms, which would be entailed in the re-distribution of power throughout the various social levels, are those who do not have the ability to bring about those changes. The elite comprises of, the state, those who hold a large capital share in the economy, accountants, accounting researchers, large corporations etc. These groups of powerful people may seem very separate, but, are in fact interlinked in their control of power ...
Cite this document
(“Financial Accounting Theories Essay Example | Topics and Well Written Essays - 2250 words”, n.d.)
Retrieved from https://studentshare.net/miscellaneous/298067-financial-accounting-theories
(Financial Accounting Theories Essay Example | Topics and Well Written Essays - 2250 Words)
“Financial Accounting Theories Essay Example | Topics and Well Written Essays - 2250 Words”, n.d. https://studentshare.net/miscellaneous/298067-financial-accounting-theories.
This paper attempts to explore this concern and discuss the contemporary issues by providing logical answers based on an analysis of the practical application of theories by scholars. Accounting is a legal framework which consists of laws, regulations and therefore accounting regulations is very important.
Some of the disclosures in the annual report are mandatory and some of them are voluntarily disclosed. There are many users of the financial and accounting information who uses this information. The main users of the annual report and other voluntary disclosed information are shareholders, creditors, other investors, banks, investment analyst, government etc.
A conceptual framework is developed from the existing theories. Based upon this an exploratory research is done and along with the subjective belief on the concerned topic a conceptual framework is made by the researcher. Several theoretical frameworks are made after the financial crisis of 1929 and also after the recent financial crisis.
One of the most overarching perspectives is that financial accounting theory allows for deliberations and insights to be developed regarding more effective and efficient accounting practices. Within this context of understanding there are a number of theoretical elements, oftentimes competing, as to the proper nature of accounting progress.
Accounting is generally used to gather, process and report the daily business transactions of the corporation for the past year or years of operation. Furthermore, the following paragraphs prove why accounting has been successful as a primary tool in the decision-making strategies of the corporation’s stakeholders.
Some express comfort knowing that the theories have evolved from a systemic line of problem solving since the early 1800's, while others embrace the fact that scientific method and practical application has played a huge role in developing a more consistent baseline in latter years.
hat it serves as a powerful tool for decision making of operational, strategic, performance, forecasting, measurement as well as other factors that together represent the composition of a business. The coaxial relationship of the opposite ends of the accounting practice is
Other activities may include forecasting and budgeting which assists companies in planning their business activities for the future periods. This information is not only used for internal purposes but also a
Accounting is known as the universal language relating to business all over the world. It is used to communicate various aspects of the business. There are diverse kinds of theories that prevail in financial accounting. It has been observed
on the fact that when possible defects in the world markets are identified such as the crash of the stock market in the year 1929, it is often easy to assume that regulatory measures are required to make the situation right. Although such conclusion can be justified, is can
7 Pages(1750 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic Financial Accounting Theories for FREE!