Matt Steger Seminar 13 – Economic Consequences of Positive Accounting Theory (part II) October 8, 2009 In the current readings, Scott completes chapter 8 with an introduction to Positive Accounting Theory (PAT), its three related hypothesis, and the implication of the theory when applied to the lenses of opportunistic and efficient contract managerial mechanisms. The article entitled Financial Accounting and Reporting Standards for Private Entities , meanwhile, addresses the results of a supposedly random survey which poses the possibility of a separate framework of financial accounting standards for private entities. The connection between the two readings, I thought, centered on the idea of choice in accounting practices and its inevitability within the marketplace. Scott begins by outlining the basic principles surrounding positive accounting theory. As always, he defines the theory and then slowly progresses towards a presentation outlining the seminal research conducted in attempts to validate the theory. With PAT, we have a concept that is entrenched in the
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