Positive accounting theory term papers

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They only adopt accounting policies that allow them to gain, in the view that the firm also gains. Different types of hypothesis exist such as political cost, bonus plan and debt hypothesis that show what motives make the managers choose one accounting method over another.

Positive Accounting Theory Analysis

The management compensation hypothesis states that managers who have accounting incentives, or their remuneration that is tied up with the firm's accounting performance will tend to manipulate accounting method and figures to show the accounting performance better than it should be. Older managers will tend to ignore any research and development costs because it will lower current year profits affecting their income.

The political cost hypothesis assumes that firms will tend to show their profits lower by using different accounting methods and procedures so that the firm does not attract the attention of politicians, who will have an eye on high profit industries. Allowing lower profits steers away any attention by the public and the eyes of the government [3] who will place higher regulation on high earning firms. From Wikipedia, the free encyclopedia.


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Accounting research Research areas. Accounting information systems Auditing Financial accounting Governance Management accounting Tax accounting. Analytical Archival Experimental. Specific topics. Convergence of accounting standards Earnings management Earnings quality Earnings surprise Positive accounting Post-earnings announcement drift Voluntary disclosure.

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Accounting journals. Related topics. This section needs additional citations for verification. Please help improve this article by adding citations to reliable sources.

Unsourced material may be challenged and removed. The Nature of the Firm. Economica 4. Meckling Journal of Financial Economics, 3 4.

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Positive accounting theory

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Accounting Theory - Comparison between Positive and Normative Approach - Essay Example

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