Australia Accounting Theory - Essay Example

 1. Introduction This paper seeks to prepare annotated bibliography for each of the four articles selected. The articles selected include Perspectives on Recent Capital Market Research by Beaver (2002), Positive Accounting Theory, Political Costs and Social Disclosure Analyses: A Critical Look by Milne (2002), Social and environmental reporting and hegemonic discourse by Spence (2007) and Regulation as Accounting Theory by Gaffikin (n.d.). 2. The Annotated Bibliographies 2.1 Beaver (2002) Perspectives on Recent Capital Market Research, The Accounting Review, Vol. 77, No. 2, pp. 453-474 In writing the article, Beaver (2002) attempted to prove one perspective on major areas of capital market research which he felt to have contributed much to an understanding of accounting numbers based on published results of researches for the last decade. He has selected only five research areas which he believed to have made greatest contribution to existing body of knowledge from his personal point of view over the last decade particularly in illustrating the degree to which market research has become interconnected to one another. The selected areas explored by the author included market efficiency, Feltham-Ohlson modeling, value relevance, analyst behavior and discretionary behavior. The author personally found the said topics to have the greatest impact on capital market research for the last decade where he also revealed the topics’ capacity to address important questions and the fact they are linked together by building upon one’s another’s knowledge and research designs. On the other hand, the author has found as well that the said topics have raised issues that are still unresolved at this point as it was r and in previous works of another author that accounting research is made distinct and important only if they confront market efficiency and market valuation. Beaver (2002) believes that unresolved nature of the controversy will keep it still to be a subject of research as what happened thirty five years ago. This work is believed to have at least provided a status of the various researches that may point to the fact of continuing nature of research as affected by the changing conditions of the business environment. 2.2. Milne (2002) Positive Accounting Theory, Political Costs and Social Disclosure Analyses: A Critical Look, Elsevier Science Ltd., Available online at http://www.idealibrary.com Milne (2002) has critically reviewed the existing literature to establish for himself evidence for positive accounting theory of corporate disclosures. He claimed to have provided detailed evidence and has illustrated the failure of the positive accounting theorists in latter’s effort to take possession social and environmental accounting research. He had to trace the previous works of other authors as bases of the study. The author has in fact cited evidence where found that ‘high profits’ of companies is shown to have diminished because of concept of political costs that created vagueness with the other social theories of disclosure. This means that positive accounting theory’s argument of the capacity of accounting policies ton matter in creating value for business as long as there is proper disclosure appears to have not been clearly established in his study. Milne (2002) found several things in his review of the work of Watts and Zimmerman (1978) for the latter’s theoretical base. He found that none of the studies had revealed the full arguments of Watts and Zimmerman as far as discretionary management behavior is concerned. Specifically, all the three hypothesized predictors of behavior had not been used by the studies he reviewed. He found only the use or size of political cost hypothesis and thus he concluded to be weak test of the original argument of previous authors. In addition the author noted about the failure of the studies to take opportunity in studying the management behavior other than the chosen variable that one might expect to exist. In other words, the studies were not objective enough to study the required variable. 2.3. Spence, C. (2007), Social and environmental reporting and hegemonic discourse, Accounting, Auditing & Accountability Journal Vol. 20, No. 6, pp. 855-882 Spence (2007) in the article explored the construction of capitalist discourse through social environment reporting and to think about the implications that such may have for the function in the context of Social and Environmental Reporting (SER). In his methodology, he made used the discourse theory of Laclau and Mouffe to frame SER as a hegemonic practice. In using the same discourse theory as a lens by which the interpret the findings of an empirical study, Spence (2007) was in effect exploring managerial perception of SER motivations as well was the related interactions with a organizational, social and environmental framework. He discovered that numerous motivations drive both SER and CSR while realizing the motivations essentially on a business case basis. He thus further found that because of the inevitability of this business case; he could only deduce that same business case theory to be a factor in shaping and constraining the ideologies that are supported and made known via SER. Spence (2007) has therefore also to accept, as a consequence in terms of limiting his study about the notion that the huge majority of said motivations may be considered understood as part of a business case theory. He therefore expressed the implication of his finding that there should be recognition of the cultural and ideological obstructions to fuller answerability as demanded from corporate managers. There is reason to agree that there is such as business case theory since there could be no two companies that are exactly alike. One could just see that organizations have different people and if one will go to basics of individual differences, the theory gets clearer. 4. Gaffikin (n.d.), Regulation as Accounting Theory, School of Accounting & Finance, University of Wollongong, Australia In this Article Gaffikin (n.d.) was arguing that regulation will continue to exist in companies because the market efficiency theory has failed to provide the solution of the many problems cause by adopting alone the latter assumptions into the business world. The author has deduced that regulation is an evidence of market failure and could also be seen as “theory failure” He cited the fact the accounting profession’s pursuit of the underlying structure through the generally accepted accounting principles (GAAP) yet market continued to operate less efficiently than expected. He noted that that “theory failure” and totally free market disregarded the broader social setting of the accounting discipline. He cited the fact the history has demonstrated the incapacity of the theory of regulation to prevent people from engaging in inappropriate activities or illegal. According to Gaffikin (n.d.), there could still be tax evasions, corporate fraud and corporate collapses despite the regulation. He admitted however the fact the regulations failure is not only evident in the accounting profession but the same problem could also be found in the medical profession where doctors themselves take drugs, legal profession where lawyers make ways to avoid imprisonment for their guilty clients, engineering profession where practitioners will cut cost by using inferior materials. Admitting the pervasive reality society finds the justification to impose standards against these erring professional in the form of regulation. Gaffikin (n.d.) concluded that regulation will continue to exist because of the interplay of political forces and the kind of regulation will vary on per situation basis. These political forces has cause more for the regulation in accounting in demanding accountability form the profession and the accounting professionals. References: Beaver (2002) Perspectives on Recent Capital Market Research, The Accounting Review Gaffikin (n.d.) Regulation as Accounting Theory, School of Accounting & Finance, University of Wollongong, Australia Milne, M. (2002) Positive Accounting Theory, Political Costs And Social Disclosure Analyses: A Critical Look, Elsevier Science Ltd. Spence, Crawford (2007); Social and environmental reporting and hegemonic Discourse, Accounting, Auditing & Accountability Journal, Vol. 20 Watts and Zimmerman (1978) “Towards a Positive Theory of the Determination of Accounting, Standards”, The Accounting Review, Vol. 53, No. 1, pp. 112–134. Read More