Criticisms
- It does not provide any prescription, it does not state what ought to happen, rather explains and predicts what would happen, which is the aim of positive accounting theory and this is insufficient
- It is not value-free because it only explains and predicts what people might do, ignoring altogether on what they should do.
- It assumes that every managers' (agent) and owners' (principal) actions have a self-interest motive. With the main view of maximizing their own wealth without considering the adverse.
Read more about this topic: Positive Accounting
Famous quotes containing the word criticisms:
“The sway of alcohol over mankind is unquestionably due to its power to stimulate the mystical faculties of human nature, usually crushed to earth by the cold facts and dry criticisms of the sober hour. Sobriety diminishes, discriminates, and says no; drunkenness expands, unites, and says yes.”
—William James (1842–1910)
“I have no concern with any economic criticisms of the communist system; I cannot enquire into whether the abolition of private property is expedient or advantageous. But I am able to recognize that the psychological premises on which the system is based are an untenable illusion. In abolishing private property we deprive the human love of aggression of one of its instruments ... but we have in no way altered the differences in power and influence which are misused by aggressiveness.”
—Sigmund Freud (1856–1939)