Properly identified imaginary needs, an inaccurately proposed methodology: The case of Rochester school of accountancy’s positive accounting methodology

Khalid Al-Adeem

doi:10.24818/jamis.2021.04003

Abstract

Research Question: Whether accounting research has been in a better status after the domination of Rochester School of Accountancy’s Positive Accounting Methodology. Motivation: This study revisits the debate of the validity of Rochester school of accountancy's positive methodology. Rochester school of accountancy's positive accounting research has properly identified the assumed imaginary need of the US market. While positive accounting methodology may not be scientific under various accounts for science, it has contributed to accounting methodologically. Idea: Restricting financial accounting on issues related to decision-usefulness and perceiving corporate reporting as a product of accounting choices from an agency theory perspective constrains other dimensions of reality. Any restrictions to definitions of the role of accounting and its function (Glauter & Underdowen, 1974) blocks profoundly deep-rooted in contextual factors such as a country's social, political, and economic environment that all make up accounting which supposedly needs to be considered (Hellmann et al., 2010) in properly theorizing comprehensively practiced accounting. Data: Extensive writings have that documented internationally throughout time have been looked over. Tools: An analytical and critical examination has been conducted upon internationally accounting literature in a wide-ranging manner to provide an evaluation regarding Rochester school of accountancy's positive accounting research. Findings: The positive accounting methodology of the Rochester school of accountancy has been criticized by several accounting researchers for decades and even deem it disappointment and probably shame. Yet, Watts and Zimmerman declared themselves prime candidates. Its prevalence is the rhetoric of scientific inquiry. A measure of the failure of the so-called positive accounting methodology has achieved lays in its inability to become universal because differences in institutional environments persevere in the world. Contribution: Revisiting the debate of the validity of Rochester school of accountancy's positive methodology potentially contributes to our knowledge in assessing its legitimate prevalence in academic accounting research. New accounting researchers and scholars need to be aware of the predominant theoretical structure that governs the empirical financial paradigm and its limitation. This is especially significant to accounting researcher who has been intellectually trained under the positivistic tradition of economics.

Highlights

The positive accounting methodology of the Rochester school of accountancy has been criticized by several accounting researchers for decades and even deem it disappointment and probably shame
A measure of the failure of the so-called positive accounting methodology has achieved lays in its inability to become universal because differences in institutional environments persevere in the world
Contribution: Revisiting the debate of the validity of Rochester school of accountancy's positive methodology potentially contributes to our knowledge in assessing its legitimate prevalence in academic accounting research

Summary

Introduction

Without an adequate understanding of the identified phenomenon, predicting their behaviors may forever be impossible—different modes of reasoning yield specific types of theatrical explanations, e.g., theories. Similar to the epistemological and ontological divergence in establishing understanding about the universe and universal laws that govern perceived reality, offered explanations about an observed phenomenon differ methodologically [1] depending on the assumptions underlying such methodologies of inquiry employed in carrying our investigations. Accountants and accounting theorists have primarily employed two modes of reasoning to develop and structure their proposed accounting theories (e.g., Ijiri, 1975; Schroeder et al, 2010; Wolk et al, 2004). The first type is normative: this type prescribes the contents that should be reporting and that ought to be Properly identified imaginary needs, an inaccurately proposed methodology: The case of Rochester school of accountancy’s positive accounting methodology measuring corporate performance. The second type is the positive type of theorization: this type describes the content of corporate reporting as it is

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