Positive Accounting Theory

PAT Concept
Agency
Theory
Normative
Theory
Bonus
Plan
Hypothesis

Efficient Market
Hypothesis (EMH)
Positive Accounting
Theory (PAT)
Debt
Covenant
Hypothesis

Accounting Standards and

Practices

Political
Cost
Hypothesi
s
2

Positive Accounting Theory

Watts and Zimmerman in 1978 and

1986

Apply to Positive Theory of Economic

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.
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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.

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).

The Three Hypotheses

1.

2.

3.

The Bonus Plan

Hypothesis
The Debt Covenant
Hypothesis
The Political Cost
Hypothesis

The Bonus Plan Hypothesis

Bonus based on net income
To get more bonus, choosing
accounting methods that
increase current reported
earnings

10

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 managers 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 accountingbased 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

15

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

Accounting Standards and

Practices

Political
Cost
Hypothesi
s
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