286.F捷开通讯公司的税务筹划探讨 外文.doc

Positive Accounting Theory and ScienceMd Humayun KabirSenior LecturerFaculty of BusinessAuckland University of TechnologyAuckland, New ZealandAbstract: This paper examines the development of positive accounting theory (PAT) and compares it with three standard accounts of science- Popper (1959), Kuhn (1996) and Lakatos (1970). PAT has been one of the most influential accounting research programs during the last four decades. One important comparison to which Watts and Zimmerman (1986) have appealed to popularize and legitimize their approach is that their view of accounting theory is the same as that in science. Thus, it is important to examine how far accounting could have been studied in the mould of science and how the development of PAT compares with the three standard accounts of science. Such a comparison will enhance our understanding of how PAT progressed over the last decades and what methodological gaps remain. This paper shows that there are some limits to the study of accounting in the mould of natural science. Furthermore, the methodological position conforms to none of the standard accounts of science. Rather it contains elements of all three. Finally, it identifies some methodological gaps in PAT.Keywords: Positive Accounting Theory, Science, Methodology, Philosophy of Science, Methodological Controversies1. IntroductionThis paper examines the development of positive accounting theory (hereinafter PAT) and compares it with three standard accounts of science. There is some confusion about what PAT is. If the definition of accounting theory (i.e., accounting theory seeks to explain and predict accounting and auditing practice) given in Watts and Zimmermans (W & Z) 1986 book is taken to mean PAT, studies of accounting choices and auditing practices constitute PAT. This theory is discussed in Chapters 8-14 of W & Z (1986). At the same time, W & Z (1986: 1) also say that their book seeks to explain the economics-based empirical literature in accounting and their book describes, in addition to accounting choice studies, capital market-based accounting research. W & Z (1986: 37) further say that Ball and Browns 1968 paper initially popularized positive research in accounting. This seems to suggest that PAT includes both capital market-based accounting research and research in accounting choices. This paper takes PAT to include both research programs. This usage is consistent with W & Zs (1986: 8) assertion that they use the term “positive” to differentiate it from “prescriptive”.PAT has been one of the most influential accounting research programs during the last four decades. It has spawned a lot of empirical research on the association between accounting numbers and stock prices and returns, and determinants of accounting choices by management. It has spawned a number of accounting journals, among which the Journal of Accounting and Economics is the most prominent. Brinn et al. (1996), in a survey of UK academics perceptions of journal quality, found that the top four accounting journals are: Journal of Accounting and Economics, Journal of Accounting Research, the Accounting Review, and Accounting, Organizations and Society. Articles published in the top three journals are predominantly in the positive tradition. The sheer number of articles in these two paradigms published in major accounting journals and the dominance of PAT in PhD programs in U. S. and other universities testify to the dominant position of PAT. In fact, the emergence of empirical accounting research as the dominant research approach can be attributed to PAT. Thus, judged by the number of research articles, the number and dominance of the journals it spawned, and the dominance of PAT in doctoral programs, PAT has been immensely influential.One important comparison to which W & Z (1986: Chapter One) have appealed to legitimize and promote PAT is the sameness of their view of theory and that in science. They have cited various philosophy of science authors to assert that their view of theory is the same as that in science and to justify their method and to discredit, to a certain extent, normative theory. Thus, given that PAT has been here for around four decades, it is important to examine how far accounting could be studied in the mould of natural sciences and what were the limits. It is also important to revisit the methodological positions of PAT. It would be interesting to see how the development pattern of PAT compares with accounts of science to which W & Z appealed to legitimize and promote their theory. This is because such a comparison will enhance our understanding of how PAT progressed and what are the methodological gaps that remain.It is to be noted that PAT has been subject to various criticisms since its emergence. For example, Chambers (1993) called the advocates of PAT as PA cult. Sterling (1990) criticizes PAT on the ground that it restricts itself to the positive study of accounting practice and accounting practitioners and hinders accounting progress by neglecting the need for the assessment of accounting practice. Sterling (1990) further assesses its potential accomplishment as being nil. Whittington (1987) criticizes PAT for its methodological intolerance and asserts that normative accounting theory has a legitimate place in accounting. Neu (1997) provides a largely negative appraisal of PAT. Sue (1997) says that that PAT narrows the researchers focus. Hall (1997), on the other hand, disagrees with Sterlings (1990) assessment that the potential contribution of PAT is nil. Deegan (1997) examines how PAT has ignited emotions among academics. It attracted many academics and alienated some at the same time. Milne (2002) judges PATs attempt to explain an entitys social disclosures as failure. This paper focuses mainly on W & Zs 1986 book and 1990 paper and the empirical accounting literature of accounting choices. The first two sources contain some methodological discussion by the two protagonists of PAT and the empirical accounting literature is surveyed to determine how it developed during the last four decades. This paper discusses three interrelated methodological issues: (a) how PAT progressed over time, (b) role of counterevidence/anomalies in PAT, and (c) how a theory is to be chosen from among competing theories. These three issues are chosen because, as mentioned above, Popper (1959), Kuhn (1996) and Lakatos (1970) do not give the same account of these issues.2. Development of PATPAT started with examining some assumptions underlying normative accounting prescriptions during the 1960s. Two sets of empirical studies2 were conducted. One set of studies (e.g., Ball and Brown, 1968; Beaver, 1968; Foster, 1977; Beaver, Clarke and Wright, 1979; Beaver, Lambert and Morse, 1980; Grant, 1980; McNichols and Manegold, 1983) examines the association between accounting earnings numbers and stock prices. Results indicate that earnings numbers reflect factors (e.g., cash flow, risk, etc.) relevant to stock valuation. This, according to W & Z (1986), undermined the claim in normative accounting literature that accounting earnings numbers are meaningless because they are computed using multiple valuation bases. The second set of studies (e.g., Kaplan and Roll, 1972; Sunder, 1973, 1975; Ricks, 1982; Biddle and Lindahl, 1982) attempts to discriminate between two competing hypotheses- the no-effects hypothesis and the mechanistic hypothesis.3 Evidence in these studies is mixed and could not successfully discriminate between the competing hypotheses.The above sets of studies have used the Efficient Market Hypothesis (EMH) and the Capital Asset Pricing Model (CAPM) as their underlying foundation. Furthermore, it was assumed that contracting costs4 were zero. Overall, these studies raised doubts about the empirical descriptiveness of the following assumptions underlying normative prescriptions during the 1960s: (a) there is only one source of information about a company, (b) earnings numbers are useless because they were not prepared according to a single basis, and (c) it is possible to mislead the stock market by manipulating the earnings number through accounting choices. Information content studies reveal that these assumptions are unlikely to be descriptive of the real world. The EMH implies that there is competition for information. There are alternative sources of information about the firm such as information releases by management, interviews of corporate personnel by analysts, etc. The observed association between unexpected earnings and abnormal rate of return reveals that earnings number reflects factors relevant to the valuation of stock despite not being calculated on a single basis. Furthermore, the believers in EMH and CAPM argued that it is not possible to systematically mislead the market by accounting changes. The market differentiates between accounting changes having cash flow effects and changes with no cash flow effects. Thus, the mechanistic hypothesis was unlikely to be descriptive of the real world.As noted above, early studies could not successfully discriminate between the noeffects hypothesis and the mechanistic hypothesis. This did not lead to the rejection of the no-effects hypothesis. Instead the results led the researchers to examine the methodological aspects of those studies and question the empirical validity of one important assumption (i.e., zero contracting costs) underlying the tests. This has led to a breakthrough in accounting research. It has long been held in economics that contracting costs are non-zero (Coase, 1937). Accounting researchers abandoned the assumption of zero transaction and information costs.This breakthrough opened the door to possibilities for explanation and prediction of variation of accounting practice across firms. The major idea behind this literature is that the firm is a nexus of contracts and accounting methods constitute an integral part of this set of contracts. Accounting numbers are used to write, monitor, and enforce contracts. Viewed in this way, accounting can affect firm value via their impact on contracts. Accounting is no longer mere form as was assumed under the EMH and CAPM regime.5 The dropping of the assumption of zero contracting costs has shown that accounting methods have the potential to affect the cash flow to the contracting parties. It thus provides incentives to the contracting parties to influence accounting methods.Though the above idea is general, early empirical studies of accounting choices investigated the impact of variables related to earnings-based bonus plans, debt, and the political process affecting the firm. Three major hypotheses tested are: (a) the bonus plan hypothesis, (b) the debt-equity hypothesis, and (c) political cost hypothesis. The bonus plan hypothesis states that firms with bonus plans choose accounting methods so as to increase current period earnings. The debt-equity hypothesis says that firms with higher debt-equity ratios choose accounting procedures so as to shift earnings from future periods to the current period. The political cost hypothesis says that large firms rather than small firms choose accounting methods so as to shift earnings from the current period to future periods. Size has been used as the proxy variable for political attention in early studies (e.g., W & Z, 1978). Underlying all these hypotheses is the assumption of nonzero contracting costs. Empirical evidence is Under the EMH and CAPM regime, accounting is mere form and does not affect cash flow except the switch to the LIFO inventory method that affects tax in the USA. generally consistent with these hypotheses (See W & Z, 1986: Chapter Eleven; Christie, 1990). Another stream of research examines the stock price effects of accounting changes- both mandated and voluntary (See W & Z 1986: Chapter Twelve).After the initial studies of earnings management, empirical studies have investigated different hypotheses. For example, some have examined earnings management around specific events (e.g., management buyouts (DeAngelo, 1986), labor negotiation (Liberty and Zimmerman, 1986), proxy contests (DeAngelo, 1988), import relief investigation (Jones, 1991), non-routine executive changes (Pourciau, 1993), and initial public offerings (Teoh et al., 1998). Still others have investigated the linkage between corporate governance characteristics and earnings management (e.g., impact of institutional ownership on R & D behaviour (Bushee, 1998), impact of independent directors and CEO stockholdings on earnings management (Reitenga and Tearney, 2003), impact of the then Big 6 auditors on discretionary accruals (Becker et al., 1998; Francis etal., 1999), impact of Big 6 auditor industry expertise on earnings management (Krishnan, 2003), association between auditors fees for audit and nonaudit services and earnings management (Frankel et al., 2003), impact of outside directors and audit committee on abnormal accruals (Peasnell etal., 2005), association between board of director characteristics and conservatism (Ahmed and Duellman, 2007). Also recently, some studies have examined the rationale of accounting conservatism (Watts, 2003a, 2003b).3. Difficulties of PATThis section discusses two difficulties of PAT. First, there is a long-running debate on whether the methodology of the natural sciences is appropriate for social sciences. There are some (e.g., Malinowski, 1960; Durkheim, 1964) who believe that the methodology of natural sciences can be used to study social phenomena. Durkheim (1964), for example, treated social phenomena as things and argued that they be treated as things. Thus, they can be studied objectively as external things. There are others (e.g., Lessnoff, 1974: 32) who believe that the model of physical sciences is not appropriate for social sciences in several aspects. To see an event as a human action, it is necessary to interpret empirically observable behavior in terms of mental categories. It is the subjective aspect of behavior, not its physical aspect, which provides meaning to an action. Weber (1964) argued that action is social insofar as, by virtue of the subjective meaning attached to it by the agent, it is conditioned by the agents awareness of the behavior of others. Both Whitley (1988) and Mouck (1990) argue against the reliance of accounting researchers on the philosophy of natural science.As the brief review in Section 2 shows, one major question that PAT researchers seek to answer is: why do managers make accounting choices as they do? According to Intentionalism, the explanation must be couched in terms of mental processes of the agent (i.e., the manager) (Fay, 1996: 136- 139). The explanation must be couched in terms of beliefs and reasons that weighed in the mind of the manager at the time of making accounting choices. The validity of explanation does not depe