Assessment Value: 20% Instructions: 1. This assignment is to be submitted in accordance with assessment policy stated in the Subject Outline and Student Handbook. 2. It is the responsibility of the student who is submitting the work, to ensure that the work is in fact her/his own work. Incorporating another’s work or ideas into one’s own work without appropriate acknowledgement is an academic offence. Students can submit all assignments for plagiarism checking (self- check) on Blackboard before final submission in the subject. For further details, please refer to the Subject Outline and Student Handbook. 3. Maximum marks available: 20 marks. 4. Due date of submission: Friday Week 6 5. Assignment should be of 2,000 words. Please use “wordcount” and include in report. Important Note: Please submit Assignment through SafeAssign Guidelines for Literature Critiques Students are require to read and understand assigned article. Students must submit a critique of assigned academic article. Please follow the format to complete your assignment. Details about the format, structure and assessment criteria for the critique are presented below. Remember that the critique is due in end of week 6. FORMAT: 2000 words (maximum) The critique submission should be typed. Work should be double-spaced with HI6025 Accounting Theory and Current Issue TRIMESTER 3, 2016 INDIVIDUAL ASSIGNMENT a 2.4cm margin on all sides. 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Does the author draw theoretical conclusions from the research that are justified by the methodology? How do these limitations affect the significance of the article and the contribution it makes to the discipline, particularly the findings set against the research method?  Conclusions: Summarising the main points and drawing implications of your critique. Marking Guidelines for the Literature Review Critique Assessment Criteria Value Identification and discussion of the theory and concepts relevant to the selected article 5 Analysis and demonstrated level of understanding of key issues and theory presented in the article 5 Identification and analysis of strengths and weaknesses of the article leading to conclusive identification of the article’s contribution 5 to research area Logical sequence of the development and quality of the presentation of the critique and Referencing 2+3 = 5 TOTAL 20 marks Note: For your own protection and peace of mind, ensure that you keep a copy of any assessment items that you submit. Also be very mindful that plagiarism is regarded very seriously and students who plagiarise risk failure. Plagiarism is the act of taking and using another's work as one's Half a Defence of Positive Accounting Research✩ Paul V Dunmore Massey University, Wellington, New Zealand Abstract Watts and Zimmerman staked a claim to the term “Positive Accounting The- ory” for their particular theory. This paper considers positive accounting in the broader sense of a research program which aims at developing causal ex- planations of human behaviour in accounting settings; other examples than PAT exist in accounting. The ontology and epistemology of such a program is examined. The logic of statistical hypothesis testing, while superficially analogous to Popper’s falsification criterion, is much weaker. Although the broad positivist research program is potentially very powerful, it is being let down by deficiencies in practice. Common problems are casual construction of theoretical models to be tested, undue reliance on the logic of hypothesis testing, a lack of interest in the numerical values of parameters, insufficient replication to warrant confidence in accepted findings, and the use of theo- ries as lenses to examine qualitative data rather than as explanations to be tested. Illustrations from good papers are considered. As positive research is currently practiced in accounting, it seems largely incapable of achieving the scientific objectives. However, Kuhn’s description of “normal” science fits positive accounting research quite well. The prospects are briefly discussed for a Kuhnian crisis and revolution, which might liberate positive accounting to achieve its potential. Keywords: positive accounting, research methods, normal science 1. Introduction In this paper I examine the positive approach to accounting research. Pos- itive accounting research is part of the wider intellectual project of scientific research, which is intended to understand the cause-and-effect relationships ✩This draft has benefited from comments by Jenny Alves, Amy Choy, David Cooper, James C. Gaa, Thomas Scott and Dan Simunic, and seminar participants at the University of British Columbia and Victoria University of Wellington. Draft - please do not cite December 2, 2009 in the world under study. (As I will explain below, some streams of critical accounting research fall within this definition and are subject to the argument devloped in this paper.) The setting of accounting is one in which causes of human behaviour may be explored in large and complex organizations where face-to-face interaction is largely replaced by less-personal or completely im- personal systems of information for decision-making. To understand both the importance and the deficiencies of positive accounting research, I briefly review the wider intellectual project, with its ontological and epistemolog- ical assumptions. This review exposes serious deficiencies in the way that positive accounting research is actually performed, which prevents it from making a meaningful contribution to the wider project. These deficiencies are illustrated by examining some good recent papers. The illustrative pa- pers could have been chosen from any area of accounting, but to focus the discussion they will be selected predominantly from the auditing literature. If positive accounting research is a well-established social system which is not well-designed for contributing to the scientific research project, its real purpose may be different. The concept of the disciplinary matrix used by Kuhn (1970) suggests instead that positive research may be a paradigm which is optimal for solving accepted puzzles, within a social group which accepts and rewards such puzzle-solving regardless of the social or intellec- tual contribution to be derived from the solutions. This suggestion gains weight from data presented by Lee (1997) on the dominance of the key ac- counting journals by a self-replicating ́elite. If that is so, there seems little hope that the ́elite could be persuaded to adopt a more effective paradigm. However, the data of Fogarty and Markarian (2007) hint that the relative position of the ́elite may be declining. Possibly, therefore, we may anticipate a future crisis and an opportunity for adopting a more useful paradigm. In the meantime, I offer suggestions for actions by referees and editors to nudge the present system towards liberating positive accounting research to achieve its potential. In papers such as this, one is expected to disclose one’s background and biases. I was trained as a theoretical physicist, and my accounting research has been positivist, concerned either with building or testing models. Thus, my criticisms are from the perspective of one who thinks that the research project is important, and is disappointed by the ineffective versions that are now practiced in accounting. However, my father is an historian, and I am by no means dismissive of non-positive approaches to understanding the world. 2 2. The Scientific Research Project Imagine a stream of intellectual enquiry built around the following work- ing hypotheses: 1. There exists a world which is independent of our imagination. That is, we did not make it up; and events in that world are not subject to the control of our wishes. 2. Events in that world have causes which are themselves part of the world. That is, events are neither completely random nor the results of interven- tions from outside the world. 3. It is possible for normal people to obtain fairly reliable information about events in the world, by careful observation. This does not imply that we will never be mistaken in our observations, only that the observations are not completely unconnected to the world. 4. The purpose of the intellectual enquiry is to use observations to gain an understanding of the world, and in particular of causation. That is, we seek mental models which correctly map the causal processes that occur in the world. I should immediately make it clear that I am not asserting the truth of these hypotheses, merely asking for a ‘willing suspension of disbelief’ to permit their discussion. Indeed, I advance them fairly tentatively, conscious that for most of human existence they would have been thought preposterous or impious, and that perhaps the majority of humanity would still find them so.1 The generally agreed explanation has been that events in the world are caused by the intervention of non-worldly beings: gods, demons, spirits, and the like. The only major point of disagreement has been over which beings are responsible. When the idea that the world might be understood by rational enquiry was first invented2 in Greece, in a remarkably short period about 2,500 years ago, it had to contend not only with conventional Greek mythology but also with other views of what the world is like and what may be understood about 1After the devastating Kashmir earthquake of 2005, Pakistani physicist Pervez Hoodb- hoy was explaining to his graduate students the plate-tectonic forces that caused the earthquake. “When I finished, hands shot up all over the room,” he recalls.“‘Professor, you are wrong,’ my students said. ‘That earthquake was the wrath of God.’” (Belt, 2007, p. 59). 2 It would be unfair, of course, to attribute the idea to a single person, and many of the writings of the time are fragmentary and known largely from later references to them. However, Anaximander of Miletus (ca 610–546BC) seems to have been the first to argue that the world was driven by physical rather than supernatural causes. 3 it. The sophists, for example, seem to have had a distinctly postmodernist view: the sophist Gorgias argued (1) that nothing exists; (2) that if something existed, one could have no knowledge of it, and (3) that if nevertheless somebody knew something existed, he could not com- municate his knowledge to others. (“On Nature or the Non-Existent”, translated in Encyclopædia Britannica, 2009) Clearly, such a view precludes the sort of enquiry that I am positing, and in- deed the sophists concentrated instead on the development of skills in rhetoric and on giving advice for living; if there can be no confidence in gaining real knowledge, then success might instead be sought in one’s ability to persuade others to one’s views (a useful skill in many walks of life, then and now). Likewise, religious understandings of the world, whether animist, Abra- hamic or Buddhist, do not encourage such enquiry.3 There is a well-known story, which sadly appears to be untrue (Hannam, 2009, p. 312), that var- ious theologians refused to look through Galileo’s telescope on the grounds that either it would show what was already known from Church doctrine and the writings of Aristotle (so looking was pointless) or it would show something contrary to that teaching because it had been corrupted by the Devil (so looking would be misleading). This is a self-consistent philosophical position, recognizable today in some creationist attitudes to evidence about evolution; it cannot be disproved, but it clearly precludes any real advance in understanding of the world. The Greek tradition of rational enquiry petered out as Rome gained as- cendancy, and collapsed entirely with the classical world itself. It was contin- ued by a brilliant handful of Islamic scholars, and transferred to Europe as Spain was reconquered and works of Islamic scholarship fell into the hands of the victors. It then gradually grew from the pursuit of a few amateurs to the current industrial-scale intellectual enterprise. The idea that the world might be rationally comprehensible, which must once have seemed a forlorn hope, has gained real traction in the last few centuries, having extended from 3The hypotheses are not necessarily inconsistent with religious belief. One may posit that a Being created the world and left it to run according to some set of internal causal rules, or even that a Being intervenes at every instant to give effect to the results that would arise if causal rules were operating. However, if a Being set the world in motion but then intervenes from time to time to alter the results for the benefit of His followers or otherwise, then the programme of enquiry described here will eventually fail when it encounters events that are inconsistent with the usual causal rules; that is, hypothesis 2 will be shown to be false. 4 astronomy and mathematics to physics, to chemistry, to biology, and most recently to psychology and the social sciences (and to various sub-branches and applications of each of these fields). It may still turn out to be wrong, or to have only limited validity, but at present there is no compelling evidence of any limits. Past claims that ‘science will never be able to answer X’ have often proved wrong in an embarrassingly short time, and current proponents of such claims (as, for example, about consciousness and the nature of sub- jective experience) might wisely refrain from being too dogmatic until they know what another few centuries of enquiry may reveal. The intellectual program I describe is, of course, the scientific research program; in economics and accounting, it is described as positive research. It has become the mainstream accounting research program in