On the Impossibility of a Static Accounting Theory: A Short Essay on the Nature of Accounting Theory

Abstract

Without its own theory, accountancy is the greatest human invention because it has assumed multiple roles over time and across geographic contexts and economic systems. The flexible and adaptive nature of accounting necessitates a changing theoretical structure for accountancy over time and across contexts. An evolutionary theoretical structure “allows for the existence of important, unresolved issues” and thus ensures a sustainable profession over time. Yet, proposed accounting theories have been unsuccessful in adapting to variations in the business environment. The Rochester Research Methodology, known as positive accounting research, was proposed to rescue accountancy. Once the theoretical basis on which a profession rests is uncovered and understood, practitioners can elucidate their practices and even predict their outcomes should the environment in which the profession is practiced change. Yet, time has shown that alternative approaches to theorization have not yielded a widely accepted accounting theory that serves as a meta-theory for accounting practice. Accounting is normatively developed, and the Rochester research methodology has normative roots. Accounting normative theorization should not cease, as it is an area that accounting practitioners, researchers, and educators can collaborate to develop.