The logic of positive accounting research

Abstract

Positive accounting research consists of tests of positive accounting theory; it is a substantial body of important accounting literature. The discussion in this paper is aimed at demonstrating that a problem in experimental procedure exists with such research that is created when positive accounting researchers translate the theoretical language of positive accounting theory into an empirical language that permits experimentation. Experimentally, positive accounting theory is transformed into a tautology. Experimenters define a causal variable in terms of the phenomenon they wish to explain with it. This transforms accounting practice into its own explanation, which is not quite the improvement in our understanding envisioned by positive accounting theory. In addition, the paper includes the demonstration that any plausible argument available to defend positive accounting research against the accusation that it creates a tautology requires that damage be done to the theory that informs such research.