Positive Accounting Theory
1
PAT Concept
Agency Theory
Normative
Theory
Bonus
Plan
Hypothesis
Efficient Market
Hypothesis (EMH)
Positive Accounting
Theory (PAT)
Debt
Covenant
Hypothesis
Political
Cost
Hypothesis
Accounting Standards and Practices
2
Positive Accounting Theory


Watts and Zimmerman in 1978 and 1986
Apply to Positive Theory of Economic
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Positive Accounting Theory


Teori akuntansi positif mengarahkan pemahaman
dan prediksi pilihan kebijakan akuntansi
perusahaan, dinyatakan bahwa pilihan kebijakan
akuntansi adalah bagian dari kebutuhan
perusahaan untuk meminimalisir biaya
kontraknya.
Kebijakan akuntansi ditentukan oleh struktur
organisasi perusahaan menurut kondisi
lingkungannya dan pilihan kebijakan akuntansi
menjadi bagian dari pengelolaan perusahaan. 4

Dalam praktiknya kebijakan akuntansi
akrual diterapkan lewat perlakuan transaksi
yang berkaitan dengan laba agar lebih
mendekati nilai ekspektasi perusahaan. Hal
ini mengingat pihak manajemen memiliki
kompetensi untuk mengendalikan
kuantifikasi kejadian yang berpengaruh
terhadap laba.
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Agency Theory

The agent (like the principal) will be
driven by self-interest, and therefore the
principals will anticipate that the
manager, unless restricted from doing
otherwise, will undertake self-serving
activities that could be detrimental to
economic welfare of the principals.
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Efficient Market Hypothesis
(EMH)

The capital markets react in an efficient and
unbiased manner to publicly available
information.
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Positive Accounting Theory

Assumptions:
The accountants (and, in fact, all
individuals) are primarily motivated by
self-interest (tied to wealth
maximisation), and that the particular
accounting method selected (where
alternative are available).
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The Three Hypotheses
1.
2.
3.
The Bonus Plan Hypothesis
The Debt Covenant
Hypothesis
The Political Cost Hypothesis
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The Bonus Plan Hypothesis
Bonus based on net income
 To get more bonus, choosing
accounting methods that
increase current reported
earnings

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The Bonus Plan Hypothesis

All other things being equal, managers
of firms with bonus plans are more
likely to choose accounting procedures
that shift reported earnings from future
periods to the current period
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The Bonus Plan Hypothesis


Because of the nature of of the accrual
process, this will tend to lower future
reported earnings and bonuses, other things
equal.
PV of manager’s utility from future bonus
stream will be increased by shifting earnings
toward the present
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The Debt Covenant Hypothesis

All other things being equal, the closer a firm
is to violation of accounting-based debt
covenants, the more likely the firm manager
is to select accounting procedures that shift
reported earnings from future periods to the
current period
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The Debt Covenant Hypothesis

Violation of debt covenant is costly




Restriction on dividends
Limit additional borrowing
Issuance of stock, …
Increase current earnings
 Assets increase
To avoid violation
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The Political Cost Hypothesis

All other things equal, the greater the
political costs (taxes, regulations) faced
by a firm, the more likely the manager
is to choose accounting procedures that
defer reported earnings from current to
future periods
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The Political Cost Hypothesis

Large firm with high profit attracts
media, consumers, and politicians
attention

Large firm trend to reduce profit reports
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Criticisms




Not improving accounting pratices
Not value free
Not positive thinking for humankind
…
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PAT Concept
Agency Theory
Normative
Theory
Bonus
Plan
Hypothesis
Efficient Market
Hypothesis (EMH)
Positive Accounting
Theory (PAT)
Debt
Covenant
Hypothesis
Political
Cost
Hypothesis
Accounting Standards and Practices
18