always behave in accordance with the efficient market hypothesis‚ then should we reject the research that has embraced the EMH as a fundamental assumption? In this regard we can return to earlier chapters of this book in which we emphasised that theories are abstractions of reality. Capital markets are made of individuals and as such it would not (or perhaps‚ should not) be surprising to find that the market does not also act in the same predictable manner. Nevertheless‚ the EMH has helped provide
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Accounting Theory Construction The function to study accounting theories is to classify them according to the assumptions they rely on‚ how they were formulated‚ and their approaches to explaining and predicting actual events. There are some classification which are pragmatic‚ syntactic‚ semantic‚ normative‚ positive‚ and naturalistic approaches. Pragmatic approaches are based on observing the behavior of accountants or those who use the information generated by accountant. Syntactic approaches
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Positive Accounting Positive economic theory and accounting practices are objective and based on fact. Positive accounting focuses on analyzing the economic statistics and data at hand‚ and deriving conclusions based on those figures. For example‚ if corporate growth allows a company to increase shareholder dividends over previous dividend payments‚ positive accounting theory would conclude that corporate growth causes a rise in stockholder dividends. Most bookkeeping and data collection involved
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Game Theory 9.3 A Non-Cooperative Game Model of Manager-Investor Conflict 9.3.1 Summary 9.4 Some Models of Cooperative Game Theory 9.4.1 Introduction 9.4.2 Agency Theory: An Employment Contract Between Firm Owner and Manager 9.5 Manager’s Information Advantage 9.5.1 Earnings Management 9.5.2 Controlling Earnings Management 9.6 Discussion and Summary 9.7 Agency Theory: A Bondholder-Manager Lending Contract 9.8 Implications of Agency Theory for Accounting 9.8
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rejected. Some financers has started a debate about deceptive influence of EMH on traders. They are claiming that lack of risk amendments in the theory caused participants to have "chronic underestimation of the dangers of asset bubbles breaking" (Nocera‚ 2009) The purpose of this paper is to analyse impact of Efficient Market Hypothesis on Modern Financial Theory principles and practice and as the essence to highlight relativeness of this dependence. It is going to point major financial tools based on
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accountant is able to measure and chooses to measure…” (p. 480). Required: Discuss the extent to which the “scientific” world-view of mainstream accounting researchers‚ is grounded on a belief that “reality” exists independently of thee human subject and the possible implications this has for accounting theory development. Introduction Accounting is a subject that is guided with principles and regulations. Thus‚ it is often regarded as a rigid‚ rigorous‚ and highly analytical discipline with
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+0)26-4 Accounting Theory NEED FOR ACCOUNTING Business is one of the sources of earning income. Whenever a business is started‚ it requires investment of certain amount which is called as capital. With this amount of capital the businessman may deal either with trading business or manufacturing business. In a trading business‚ he will buy goods at a lesser price and sells the same to others at a higher price. In case of manufacturing business‚ he has to buy raw materials and incur other
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Accounting Theory There is always a reason behind each and every action of a human being. A man does not anything without any sound reason. Regarding Finance‚ or financial matters‚ a man is always extra cautious and so‚ he never makes any financial transaction without any reason. As accounting deals with financial transactions‚ so every accounting work is also based on reasoning. Accounting Theories always try to explain with reason‚ the logic underlying a particular practice. Generally Accepted
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According to Robert K. Elliot‚ 1997‚ assurance is a positive declaration that produces quality information which enhances the degree of confidence for all intended users as well as improves the quality of decision that being made. It is also part of corporate governance which provide reliable and accurate information to the stakeholders such as investors‚ employees‚ government‚ voluntary sector and market regulators‚ regarding the efficiency and effectiveness of organization’s policies‚ strategies
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“The theories we use to help us understand standard-setting in national arenas (such as Australia) don’t work so well at the international level where the . . . International Accounting Standard Board (IASB) is taking a leading role. We will have to modify them or expand our theoretical repertoire” Discuss the above statement‚ clearly indicating your agreement or otherwise about the basis for your views. Abstract: The theories that are presented in this paper all assume the importance of a
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