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Critique of Articles about Accounting Issues - Essay Example

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"Critique of Articles about Accounting Issues" paper focuses on two articles such as “Towards a positive theory of the determination of accounting standards” by Watts and Zimmerman, and “Accounting and organizational cultures: a field of a new organizational reality” by Dent…
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Critique of Articles about Accounting Issues
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?Article Critique Introduction It is undeniable that accounting is a multivariate concept involving a wide variety of issues. Notably, accounting standards has been on the global limelight due to the various emerging issues. Different authors and researchers have taken different approaches in addressing accounting issues. This article critique paper particularly focuses on two articles, which have addressed two different but pertinent issues in accounting. The first article“Towards a positive theory of the determination of accounting standards” by Watts and Zimmerman primarily addresses the factors influencing large firms’ management on accounting standards and culture. The second article, “Accounting and organizational cultures: a field of a new organizational reality” by Dent primarily focuses on effects of emerging organizational culture on accounting. This paper will therefore, give a critique review of the two papers. The paper will achieve its objectives by comparing and contrasting the two research papers. The paper will also analyze the weakness and strength of each of the papers. Methodological approach used in the Articles Certainly, Watt and Zimmerman have combined several sets of facts to come up with a synergistic theory, which they named positive theory of accounting. Basing their arguments from previous authors, they have been successful in articulating several factors affecting accounting standards and in the end, they come up with a theoretical postulate that explicitly explains the factors influencing management’s attitude towards accounting standards . The paper achieves its objective by determining a functional relationship between various factors that determines cash flow of an organization. This idea is based on the fact that accounting standards are, to a large extent, affected by firm’s cash flow. Although the functional approach gives an explicit relationship between various accounting variables in an organization, not all essential variable and relationships in an organization can be defined through functions and theories. This is because some relationship and parameters are very complicated to be expressed as functions while others are explicit and hence do not require expression in form of theories and functions. Dent Dent’s paper can best be described as an interpretive research. In this paper, the author uses implicit approach to describe relationship between various variables. Organizational culture and beliefs are major factors that determine the cash flow of a certain organization; however, the relationship between the two factors cannot be expressed in an explicit mathematical format or approach. In this paper, the author uses case studies to express the relationship between culture and the performance of an organization. By analyzing the impact of the new accounting, practices the author hopes to establish the impact of culture and beliefs in an organization’s cash flow. Appropriateness of the Approach Although new accounting practices have an impact on an organization’s culture, it is difficult to establish an explicit relationship between the two factors. The approach taken by the author is therefore the most appropriate in this study. This research method depends on the suitability of different cases used in the research. Watt and Zimmerman’s paper creates new relationships on various accounting parameters from predetermined information. The paper is also established on existing theories and principles. The author then combines this information into an explicit relationship or a model. Although this research method is more complex than the approach taken by Dent it gives a better relationship between various parameters. The method also enhances prediction of occurrences using independent variables such as time. Consistency of the Information Dent begins the paper by defining an explicit objective or hypothesis for the paper. In his abstract, Dent explains that the paper will be involved in determining how new accounting practices are involved in the reconstruction of organizational culture. On the other hand, Watt and Zimmerman are able to develop a model or relationship between various accounting variables and eventually come up with an accounting model based on the organizational factors influencing accounting standards. It is worth noting that Watt and Zimmerman accounting model is consistent with other research findings since it is tested using corporate submissions and actually found to be consistent with the positive theory of determination of accounting standards. The authors use existing information and theories to develop models or relationship between different external factors and cash flow of a certain organization. On the other hand, Dent’s paper develops the relationship between cultural practices and new accounting principles or practices. Although the author does not achieve an explicit relationship between the key factors, he gives an accurate direction concerning possible relationship between the two factors. Technical Aspect The two papers were written using technical language. However, they have different presentation of arguments. Whereas it is difficult for a reader to follow through the Watt and Zimmerman’s model, it is easier to follow up the ideology of Dent. It is quite interesting to observe how Watt and Zimmerman move from a theoretical approach to mathematical formulas and eventually to a mathematical model. However, the paper becomes more abstract for a common person to understand the relationships between various factors presented in the model of firms’ submission to the FASB. Clarity of the Articles to Readers Although the two papers have related objectives, they have different impressions to the readers concerning achievements of their objectives. Dent’s paper has a clear hypothesis on which the author bases his research. However, the author is unable to link the hypothesis with existing data. In this case, the author is unable to prove his research findings using existing data or information (Dent, 1991). A reader of this article cannot establish or predict an organization’s culture using new accounting practices. The author of the article also uses an ideal case and therefore, the prediction or implications given in the paper may not be applicable in a global context. The argument in this paper lacks flexibility since the relationship of various variables explained in the paper cannot be applied in all cases. The author also fails to give constraints for the analysis. In such case, the author is supposed to give information on when the given relationship holds true or what variables are supposed to be held as constants. Dent also failed to give assumption that relates to the analysis. Unlike Dent, Watt and Zimmerman give their assumption at the beginning of the paper. The paper assumes that the cash flow in an organization is determined entirely by management practices within the organization. Authoritativeness Dent’s paper does not define a contribution to accounting literature. This is because the paper explains the relationship between organization’s culture and accounting practices without making an explicit judgment. The second paper contributes to accounting literature by developing a new function that can be useful in various accounting practices. This is a major contribution since accounting mainly deals with figures, calculations, and predictions. The author of this paper builds their ideas on existing theories and methodologies. This indicates that the author do not repeat existing information. On the other hand, Dent’s paper is just a verification of existing knowledge. Applicability of the Article Findings Watt and Zimmerman’s paper has vital contribution to accounting literature. The theories and models developed in the paper enables accountant to establish the influence of government policies on accounting outcomes (Watts & Zimmerman, 1978). Theories and principles developed in the paper can also be useful in establishing the implication of internal operations within an organization. Unlike other ordinary accounting models, the models developed in this paper have an allowance for the risk factor. Such allowances enable accountants to make accurate and long-term projections. The function utilizes variables that have a normalized variance and market expectations. This enables accountant to account for uncertainty experienced in the market and the country’s economy. The models developed in this paper also take care of stock variations and other factors such as inflation that affects stock. This is an important aspect since other popular accounting models do not take care of stock variations. Dent’s paper uses qualitative research methods; the researcher hopes to answer the questions why and how new organization’s culture affects accounting practices within an organization. Although the researcher fails to provide an adequate proof for his newly developed theory, he provides answers for some critical accounting problem. Accountants seek to express different accounting variables in mathematical format, not all variable and relationships within an organization can be expressed explicitly. Dent’s research paper is therefore, vital in establishing relationship between organizational culture and accounting practices qualitatively. Organizational culture plays a key role in determining the accounting practices within an organization, however, most accounting formulae and principles do not have provisions for cultural diversity within an organization. The qualitative approach applied in this paper is however insufficient in developing agency theory as intended by Watts and Zimmerman’s paper. Conclusion A research paper is aimed at establishing new theories or principle from basic information. A research paper can also be developed to bind existing knowledge; this involves refining existing theory or finding a better relationship between various variables. Watt and Zimmerman’s paper was developed through a functional approach. In this method, the authors utilized mathematical models to establish the relationship between organizational culture and accounting practices within an organization. Dent used qualitative approach to establish the hypothesis of his research. In this case, Dent attempted to answer the questions why and how in relation to organization’s culture and accounting practices. Although the two research papers have a different contribution to accounting literature, their contribution is of different value. Watt and Zimmerman’s paper has an immediate contribution to accounting literature since it establishes new formulas that can be utilized in different accounting practices. On the other hand, Dent’s paper provides a basis for further research. The different approach utilized by the two papers creates different impressions to different readers. References Dent, J. F., 1991. Accounting and organizational cultures: a field study of the emergence of a new organizational reality. Accounting, Organizations and Society, Vol. 16, No 8, 705-732.  Watts R. L. & Zimmerman J. L., 1978. Towards a positive theory of the determination of accounting standards. The Accounting Review, Vol. 53, No. 1, 112-134.  Read More
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