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Criticisms of Positive Accounting Theory
Criticisms of Positive Accounting Theory
1. Lack of Prescription
- It does not provide prescription and does not provide a means of improving accounting practice.
2. Positive accounting theory is not value-free as it asserts assumption that all action is driven by
self-interest.
3. Invalid Assumptions
- It relates to the fundamental assumption that all actions are driven by a desire to maximize one's
wealth. To many researchers such an assumption represents a far too negative and simplistic
perspective of humankind.
6. The measurements or proxies being used within the literature are often far too simplistic.