Critical accounting theory

Critical accounting theory Introduction There are several reasons there is no one universally accepted theory of accounting. The reasons are of two sorts. The first is philosophical. The second is practical. This essay discusses each of these. It then provides examples from accounting theory. Philosophical reasons The statement There is no universally accepted accounting theory is true by definition. Scientific understanding of the term theory denies that any theory can be universally accepted. According to Popper (e.g., 2002a, 2002b), theories are conjectures that are put to the test. If they are refuted by the test, they are either rejected or refined. If they are not refuted, they remain theories (not facts). They are then put to further tests, and are further refined. In order for this to proceed, there must exist rival theories. In this way, theories compete in a process of Darwinian selection. The theories never get to the truth, but they get progressively closer. This is the first reason there is no universally accepted theory of accounting. If there were a universally accepted theory of accounting, it wouldnt be a theory. It would be something else. Notice that, according to Popper, no theory ever arrives at certain knowledge. The best any theory can do is curtail ignorance. Moreover, if scientists were to discover a true theory, there would be no way they could know it was true, so there would still be competing theories. This last point needs elaboration. GÃ ¶dels incompleteness theorems (see, e.g., Hofstadter, 1979) demonstrate that, in any system of logic rich enough to contain formal arithmetic there exists an infinite number of statements that are true but that are impossible, in principle, for the system to know to be true. This means, in practical terms, that in any complex system-for example, an economic system-there exist solutions to problems that are known by the system, but are not known by any individual within it. This is appreciated by leading economists (e.g., Hayek, 1979). Further, given that there exist usually infinitely more wrong solutions to problems than correct solutions to problems, any attempt to solve such problems by diktat is infinitely more likely to lead to failure than to success. As regards economics, this led Hayek (1944) to his espousal of the free market. As regards theory in science, it means that any attempt to impose a single theory on anything is likely to lead to a seriously wrong theory. This is another reason for believing there can be no universally accepted theory of accounting. Any universally accepted theory could only be universally accepted if it were imposed by diktat, and, if it were imposed by diktat, it would of necessity most likely be wrong. Therefore it would give rise to a rival theory. Related to this, Feyerabend (1996) argues that there is no such thing as a single scientific method, and that any attempt to impose one is counter-productive. Feyerabends philosophy of science is summarised as anything goes. This, provides another reason for there being no single theory of accounting. If there can be no universally accepted method, there can be no universally accepted theory. There are two popular views of science that are in conflict with Poppers perspective: positivism and postmodernism. Positivism is the philosophy, associated with Ayer (1946) that says that the only meaningful statements are those that are true by logic and those that may be verified by observation. This is the verification principle. The first problem with the verification principle is that it is neither a truth of logic nor an empirically verifiable fact, therefore by its own terms it is meaningless. The second problem is that in implies science proceeds inductively. But inductive logic (drawing general conclusions from specific instances) is flawed: a million observations of white swans, for example, does not demonstrate that all swans are white (indeed, they arent: some swans are black). Postmodernism is the philosophy that reality is socially constructed. So what is real to one person may be unreal to another. At a trivial level, this is true, for different people see the same things in different ways. It is also true that, historically, science progressed in some instances by changes in world view, or paradigm (Kuhn, 1996). However, this is a question more of the sociology of science, not of ontology. And taken literally postmodernism is absurd. It leads to the conclusion that there is no such thing as reality. The prevalence of competing philosophies of science-Popperism, positivism, and postmodernism-provides another reason for there being no universally accepted theory of accounting. There is no universally accepted view of what constitutes reality. Thus one should expect there to be different theories of accounting, each with its cadre of supporters. Practical reasons There are three purposes for any theory of accounting, and each makes different demands on the theory. The first is that accounting should provide the best information about a companys position. Such a theory is prescriptive, in that it suggests how best accountants should ply their trade. Such a viewpoint is said to be normative. A normative theory is one that states what is best practice. A theory of accounting may also seek to describe what accountants do. Any science must include accurate descriptions. It is logically possible for a researcher to adhere to a descriptive theory yet bemoan the fact that accountants dont follow what the researcher considers the correct (i.e., normative) practice. There is another aspect to descriptive theories. Until the advent of cheap computers, there was no way that researchers could analyse vast collections of data. Moreover, very often the data were unavailable (Gaffikin), 2008). Computers have changed this. This is another reason for believing there is no universally accepted theory of accounting. A descriptive theory is only as good as the data fed into it. But it is impossible to analyse all the data, only different blocks of data. Different blocks may give rise to different descriptions. In describing how accountants behave, researchers must gather evidence. But what evidence? And how should researchers gather it? Positivists tend to use quantitative data. These are data that are, supposedly objective, and may be expressed numerically and manipulated statistically. Company sales figures are an example. Postmodernists tend to use qualitative data. These are data that make no claim to objectivity and are difficult to express numerically. The findings of unstructured interviews-emotions, impressions, and so on-are examples of qualitative data. Because of this, even when presented with the same evidence, different researchers may reach different conclusions. This is another reason there is no universally accepted theory of accounting. A theory of accounting can seek to explain. Such theories are scientific in the Popperian sense, for they may be refuted. It is logically possible for a researcher to believe that Theory 1 is the best explanatory theory, Theory 2 is the best descriptive theory, and Theory 3 is the best normative theory. Thus again there are many theories of accounting. Any researcher may subscribe to three different theories, and do so without being inconsistent. In practice, the distinction between normative, descriptive, and explanatory theories is blurred. Any theory of one type may have features of the others. Example theories This section considers discusses two example theories. Theory 1: Positive accounting theory There are several problems with normative theory. One concerns what to enter. Consider assets. An accountant does not know how much a companys assets are worth. So the accountant uses one of several indicators (historical cost, for instance). The accountant must also estimate how much assets depreciate. Accountants use algorithms to calculate depreciation-typically, straight line depreciation such that assets become worthless after three years. Such algorithms are only broadly accurate. Such considerations led Watts and Zimmerman (1978) to develop positive accountancy theory. The theory is in part descriptive, in that it states what real-world accountants do, and in part explanatory, in that it purports to explain why accountants behave in the way they do. The theory says, in effect, that company accounts do not accord with reality. Instead, they accord with what powerful interests (stakeholders, shareholders, managers) want others to see as reality. The theory makes two assumptions: Homo economicus. This states three things. First, people are entirely rational. Second, people act only out of self-interest. Third, people act only to maximise their wealth. The efficient market hypothesis (EMH). This states that, left to its own devices (i.e., if unregulated), the market delivers an optimum price for any good or service. The EMH states that prices accord with all available information. The reason positive accounting theory makes these assumptions is that, without them, it is difficult to make quantifiable predictions, but with them it is relatively easy. Thus, for example, with them one can predict companies in one particular environment will prefer a different form of accounting from companies in another type of environment. Thus, for example, Watts and Zimmerman (1978) predict that firms whose earnings are increased by general price level adjusted accounting (GPLA) will oppose GPLA, but firms whose earnings are decreased by GPLA will favour it. But the notion of H. economicus is problematic-some people are unintelligent, some are altruistic, and so on (Lunn, cited in Clark, 2008), The EMH is also contentious. Some economists accept it, others dont. The EMH is also vague. If the market is efficient, the EMH doesnt say how long it takes to reach a decision Also, if the EMH were true, arbitrage would be impossible. The best one can say about the assumptions is that they provide an approximation of reality. How good an approximation it is, nobody knows. This is another reason there is no universally accepted theory of accounting. Some people think the assumptions provide a good approximation; some people think they provide a bad one. Fama and French (2004) state that markets can be inefficient and investors can be ill-informed and irrational, Just as owners, governments, and workers have vested interests, so have Watts and Zimmerman. In their case, they are interested in promoting positive accounting theory. So, in this regard, the theory has a normative aspect. It concerns how accountancy researchers should practice their trade. If all researchers follow Watts and Zimmermans diktats, Watts and Zimmerman will become rich. Naturally, all accountancy researchers want to be in Watts and Zimmermans position, but the only way for them to do so is to develop a rival theory. This is another reason there is no universally accepted accountancy theory. Theory 2. Critical accounting theory Critical accounting theory isnt really a theory. Its more a style of criticism. It aims, not only to alter accounting practice, but to change society (Gaffikin, 2008). It is political. Thus, for example, Laughlin (cited in Davis, 2008) states: A critical understanding of the role of accounting processes and practices and the accounting profession in the functioning of society and organisations with an intention to use that understanding to engage (where appropriate) in changing these processes, practices and the profession. In this, critical accounting theory is postmodernist. Postmodernists point to the numerous flaws in positive accountancy theory. They highlight the weaknesses in the concepts of H. economicus and the EMH. They point out that Watts and Zimmerman use rhetorical devices to put the views across. They argue that the methodology and measuring instruments of positivist theories are crude, and so on. Occasionally, they make (or repeat) good points (e.g., the EMH is incorrect) (e.g., Mouck, 1992). As indicated, postmodernists deny the existence of objective reality. In doing so, they deny the possibility of determining the truth, or worth, of any statement. Thus they deny the truth, or worth, of postmodernism. This is the problem with postmodernism. If reality is socially constructed, then there cannot be a universally accepted theory, for socially constructed reality differs according to who is doing the constructing. A true theory to one postmodernist is a false theory to all others. That is why there is no universally accepted theory of accounting. References Ayer, A.J. (1946). Language, truth and logic. (2nd ed.). London: Gollancz. Clark, T. (2008, November 1). Market madness. The Guardian. Davis, D. (2008). Critical accounting theory. Lecture 9. Lecture notes. Bangor Business School. Feyerabend, P. (1996). Against method: Outline of an anarchistic theory of knowledge. San Francisco, CA: Analytical Psychology Club of San Francisco, Fama, E.F. and French, A.R. (2004). The CAPM: Theory and Evidence. On line: http://www.econ.sdu.edu.cn/jrtzx/uploadfile/pdf/Assetpricing/04.pdf Gaffikin, M. (2008). Accounting theory: Research, regulation and accounting practice. French Forest, Australia: Pearson Education. Hayek, F. A. (1979). Unemployment and monetary policy. San Francisco: Cato Institute. Hayek, F. A. (1944). The road to serfdom. London: George Routledge Hofstadter, D. (1979). G?del, Esther, Bach: An eternal golden braid. Harmondsworth: Penguin. Kuhn, T. (1996). The structure of scientific revolutions. Chicago: University of Chicago Press. Mouck, T. (1992). The rhetoric of science and the rhetoric of revolt in the story of positive accounting theory. Accounting Auditing, and Accountability, 5 (4): 35-56. Popper, K. (2002a). Unended quest. An intellectual biography. London: Routledge. Popper, K. (2002b). Conjectures and refutations. London: Routledge. Watts, R.L. And Zimmerman, J.L. (1978). Towards a positive theory of the determination of accounting standards. Accounting Review, 53: 112-132.

Price Mechanism

The market system is the mechanism for allocating scarce resources and thereby encouraging a positive investment climate. The problem of scarcity is common in all economic structures. The economic system of a particular country is the way in which its people, businesses and government make choices. Demand is the amount of a product consumers are willing and able to purchase at any given time. However, supply is the amount of a product that is available at any given time. The following diagram shows the relationship that demand has with supply:The above diagram shows that where the demand and supply intersects, indicates the quantity which suppliers wish to market equals the quantity which buyers are willing to take. There are many factors that have determined the general increase in global food prices over the last four years. One factor is in late 2006 the unseasonable droughts in many grain-producing countries. The top three wheat producers in the world are, China, India, and the U nited States respectively. The consequences of drought include diminished crop growth, and the ability to rare livestock.Also, it causes erosion, which further affects plantations and soil consistency. Without water there can be no irrigation. Irrigation is an artificial application of water to the soil for assisting of the proper, healthy growth of crops. Wildfires are also caused by droughts because of the lack of moisture in the air; they consume all agriculture once formed. Biofuels, a fuel substitute that is derived not from fossil fuels but from biological material maybe another cause of rising food prices. Bio fuels are commonly used in place of gas to power vehicles, to heat houses and even to cook on your stove.The factor that affects the price of crops here is that Biofuels use crops high in sugar and starch, then fermentation of these crops causes the it to produce ethanol. Ethanol is the substance, which is used for power. So as our world is becoming more eco friendly an d aware, our food prices will rise. Oil prices over the last four years have been steadily rising, causing food transport and other agriculture related machinery and treatments to rise also. From the mid 1980s to September 2003, the inflation-adjusted price of a barrel of crude oil on NYMEX (New York Mercantile Exchange) was on average under US$25/barrel.Then in 2003 it finally rose to US$30/barrel and gradually went up to US$60/barrel in 2005, and skyrocketed to US$147/barrel in 2008. These drastic increases in oil prices have taken their toll on food prices over the past four years. Wheat and grain are said to be relatively inelastic, meaning there is not much range for substituting. So where there is a large change in price there is little or no change in the quantity demanded of that particular good. The elasticity of a product can be measured by the following formula: PED = % change in Quantity Demanded of product change in price of that product World population growth is the l atest in factors to affect food prices. The world population has grown from 1. 6 billion in 1900 to an estimated 6. 6 billion today. The increase in population size has mainly been pointed to the developed countries where food prices are subsidized. In these countries, the government subsidize crops, and absorb the extra cost of food so the cost does not affect the consumer. So in reality, the developing and the third world countries are the only ones to suffer from our current food shortage.

Human resource management Essay

To establish the role of Performance Management in controlling and developing employees it is imperative to understand the definition of Performance Management and its evolution. Evolution Performance Management is relatively a new concept, which has developed tremendously since the last two decades. As per CIPD (2009) Performance Management has been around in the language of HR and people management since the 1980’s. The above point is also mentioned by Williams R, (1998) stating that Performance Management came into prominence in the late 1980s/ early  1990s. â€Å"The term performance management was first used in the 1970’s but it did not become a recognised process until the latter half of 1980s† (Armstrong, 2009). Thorpe, (2004) states that ‘Performance management as an identifiable subject for academic study and research arguably began in the mid-1990’s’ Performance Management has evolved over the years from performance appraisal systems into a more holistic approach. As per Bach, (2005) â€Å"With the increased recognition of the problems that permeate many company appraisal schemes, there has been a shift of emphasis from performance appraisal to performance management† (p290). â€Å"The reality of contemporary performance management practice is probably best seen as ‘a logical progression in the history of the development of appraisal systems’† (Lundy and Cowling, 1996, p307). Definitions ‘The essence of Performance management is establishing a framework in which performance by human resources can be directed, monitored, motivated and refined; and the links in the cycle can be audited’ (Clark, 2005) As per Armstrong and Barron, (2009) Performance management is ‘A process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance’ (cited in CIPD 2012). ‘Performance management encompasses activities such as joint goal-setting, continuous progress review and frequent communication, feedback and coaching for improved performance, implementation of employee-development programs and rewarding achievements. It can be regarded as a systematic process by which the overall performance of an organisation can be improved by improving the performance of individuals within a team framework’ (Drum, 2005) ‘Performance management is the process of creating a work environment in which people can perform to the best of their abilities. It is a whole work system that begins when a job is defined as needed and expectations are clearly communicated to the employee’ (Den Hartlog et al. , 2004) The role of Performance Management in both controlling and developing employees: Beamon, 1999, argues that, ‘Despite the increasing focus on collaboration between enterprises from one side, existing studies in the area of performance management still narrowly look at the single enterprise and its â€Å"within-enterprise† process and people ‘(cited in Busi and Bititci, 2006). The literature review brings up some interesting common themes and issues that run through the existing literature, research and definitions of performance management. These common themes will focus on features of performance management and its application in an organisation. Performance Management versus Performance Appraisal Although Performance Management evolved from performance appraisals few decades ago, most literature still intensely focuses on performance appraisals when addressing performance management. CIPD (2012) ‘While performance appraisal is an important part of performance management, in itself it is not performance management: rather, it is one of the range of tools that can be used to manage performance. However, it is a common mistake to assume that if organizations implement performance appraisals, they have performance management. Performance management is a holistic process bringing together many activities that collectively contribute to the effective management of individuals and teams in order to achieve high levels of organizational performance. The process is strategic, in that it is about broader issues and long-term goals, and integrated in that it links various aspects of the business, people management, individuals and teams. Performance appraisal on the other hand is operational, short- to medium-term and concerned only with individual employees and their performance and development. While it is one of the tools of performance management, and the data produced can feed into other elements of performance management, appraisal by itself does not constitute performance management’. Bach (2009) also states the difference between performance management and performance appraisal, ‘Advocates of performance management claim that its value resides in the cycle of integrated activities, which ensure that a systematic link is established between the contribution of each employee and the overall performance of the organisation. This strategic approach contrasts with the free standing nature of performance appraisals, in which the outcomes of each individual appraisal are rarely linked to overall corporate objectives’ (p291). However, CIPD (2005) Survey report demonstrates that, the practice of performance management still largely revolves around objective setting and appraisal. The confusion and overlapping in organizations between performance appraisals and performance management is evident form the above literature and surveys, however it still acts as a good tool for managers to control and develop employees. Performance management is a cycle, an on-going process Performance management is a cycle and for it to deliver desired results, it needs to be an on-going process. Conventionally, Performance management is portrayed as a three-stage cycle involving performance planning, monitoring and review (Armstrong and baron, 2005) The Performance management cycle CIPD (2012) also states ‘Performance management is a process, not an event, it operates as a continuous cycle’. Clark (2005) in his definition of Performance management also refers performance management as a cycle ‘The essence of Performance management is establishing a framework in which performance by human resources can be directed, monitored, motivated and refined; and the links in the cycle can be audited’. CIPD Discussion paper (2009) mentions that using a survey and a number of practice-based case studies, this work concluded that performance management was most likely to be viewed as a continuous process rather than an annual activity. Porter et al (2012) states that, ‘Performance management is not an independent activity; it is in fact a series of processes supporting different elements of effective people management. Performance therefore needs to be placed very firmly in a management context’ (p 140).

Hawaiian Stereotypes - 1259 Words

The Hawaiian culture is both diverse and unique, with its own language, traditions, and beliefs. Despite these multi-faceted characteristics, certain broad stereotypes about the culture persist in the non-Hawaiian population. My paper will explore where race, prejudice and cultural stereotypes come from and how both Hawaiian and non-Hawaiian cultures reinforce these stereotypes. According to Dictionary.com a stereotype is something conforming to a fixed or general pattern, especially an often oversimplified or biased mental picture held to characterize the typical individual of a group (dictionary.com). The term â€Å"stereotype† originally referred to a stamp used in the printing industry to make multiple copies from one single block. The†¦show more content†¦I can remember while living in Hawaii many times when a burial ground or sacred site was destroyed or moved to make way for the development of a new highway or resort. Many of my relatives who are Native Hawaiians have told me stories of how cultural and historic sites, hundred in number, have been bulldozed to make way for hotel and golf course development. Many others have been turned into tourist attractions and are desecrated in their use and misuse. These include heiau (burial grounds) or ancient temples, house sites, fishing shrines, ceremonial platforms and agricultural sites. All of these acts take place at the expense and pain of Native Hawaiians who are struggling to survive. Here you have multimillion dollar revenue and none of that money is going to support and perpetuate the culture or recover of the language and heritage of Native Hawaiians. This reminds me of many stories we have covered during class of where cultures have been oppressed in order for other cultures to succeed. Most Hawaiians have witness that tourism, as a foreigner dominated enterprise, is the plague which an already oppressed people must endure with very few other economic options or alternatives in life. The plight of Native Hawaiians is only one example of the destructive impact tourism is having on indigenous people in communities around the world. All is not well inShow MoreRelatedTourism And Its Impact On Tourism1145 Words   |  5 PagesNative Hawaiians and is a huge human rights issue today. Most Hawaiians dislike tourism greatly due to the selfishness and greediness tou rists bring to their home country. The pastor at a small rural church on the island of Kauai, Reverend Kaleo Patterson, has witnessed and dealt with numerous Hawaiians who struggle with the issues of tourism. Numerous vacation resorts that attract tourists have taken over gravesites of Hawaiians that have passed away. Due to this problem ancient Hawaiians have toRead MoreThe Colonialism Of The Walt Disney Company1571 Words   |  7 Pagesrepresentation with other prominent Disney movies centered around indigenous peoples prior to Moana, such as Pocahontas and Lilo and Stitch. I am answering this question to help my reader understand how, although Moana does include some colonial stereotypes, it is groundbreaking for its portrayal of indigenous people in Disney films. I also want my reader to understand Moana from a Polynesian’s perspective to highlight the fact that Disney still has some significant improvements to be made when theRead MoreAnalysis Of War Doll Hotel 1501 Wo rds   |  7 PagesHawaiians have experienced difficulty with understanding their identity since the arrival of the first haoles. Since then, with the promise of labor and tropical paradise, people of all different races and cultures have flocked to the islands. Before the arrival, the language, beliefs, and traditions that solidified their culture had already been established and practiced solely by the Hawaiian people for generations. Yet through years of interracial marriages, Hawaii has become home to many hapaRead MoreHawaii And The Mixing Of Peoples By Steve Olson Essay1108 Words   |  5 PagesPeoples by Steve Olson is about the history and race of Hawaii. The article begins with the last and truly full-blooded line of Hawaiian and then they mixing with European and other. Hawaii has been mixing with different race since 1779. From the article Olson stated â€Å"Almost half the people who live in Hawaii today are of â€Å"mixed† ancestry†(335 Olson). Many of the Hawaiian are mix with many race and those mixes have created a generation where one’s body structure and feature makes it difficult toRead MoreHow Princess Culture Is All Round Us1818 Words   |  8 Pagesall round us, whether we realize it or not. Princess culture incorporates many downfalls to women. We have all grown up with the pressures of this culture. Women are viewed as lower than the man, having to struggle in a male- dominated society. Stereotypes, racial issues and marginality are just a few predicaments that women had been portrayed as, in the world of the princess culture. Many Cinderella stories have been told in many different cultures that come from all around the globe. Rob Baum correctlyRead MoreThe Effects of Stereotype Threat and Self-Esteem on Task Performance3161 Words   |  13 PagesThere have been many studies on stereotype threat and self-esteem and their negative effects on task performance. These studies have focused primarily on minorities such as women, blacks, Latinos and Asians and have found that stereotype threat and self-esteem have influenced negatively in task performance. Steele (1997) investigated how self-esteem and stereotype threat affects task performance and has found that most of task failures have to do with the individual social environment. For instanceRead MoreChange, Acceptance And Embracing Differences946 Words   |  4 Pagesexchange student from Color ado Mesa University. While interviewing her, I learned a lot about the Hawaiian culture and how Hawaiians perceived people from the mainland, as they called, and how she felt about being part of a minority group in Hawaii, but also in Colorado. Kelli defines herself as a female, an American from Hawaii, and a reserved person. The culture she associates with is the local Hawaiian culture and for her, the most important values consist of being selfless and independent, learningRead MoreThe Misappropriation Of Indigenous American Cultures1790 Words   |  8 Pages19th century European colonists created a legacy of historical trauma and social marginalization concerning Native American peoples that is present still today. While such subjection is not as overt in recent decades as it has been in the past, stereotypes associated with the Native American population hold a strong presence in one of American society’s most influential institutions: popular culture. The misappropriation of indigenous American cultures in the wake of colonialism is grounded in theRead MoreFamily Dinners Encourage Healthier Eating Habits Among Adolescents939 Words   |  4 Pagesvegetables consumed overall about 500 fewer kCal per day than those who maintained their previous diets. Another slightly longer study examined the effect of the Native Hawaiian diet on body weight (Shintani, Hughes, Beckham, O’Connor, 1991). This traditional diet, which is full of fruits and vegetables, was administered to overweight Hawaiians in place of their regular meals over the course of a 3-week period. The results showed that subjects decreased caloric intake by an average of approximately 1,000Read MoreWestward Expansion During The 1800 S1577 Words   |  7 PagesThe United States annexed Hawaii due to a belief in Romantic Nationalism, and to secure its strategic location in the Pacific making it less vulnerable to European countries so that their desire for more land would be fulfilled. The desire for the Hawaiian Islands stemmed from an eagerness to keep foreign countries out of the Northern Pacific. There was always the possibility that Hawaii would be annexed or taken control of by a European country, making the United States more vulnerable. If an opposing