THE AGE OF NEOEMPIRICISM IN ACCOUNTING RESEARCH AND THEORY
Ardin Dolok Saribu, Nonni Sise Riani Manihuruk, Ayang Pratama (Doctoral'sStudents USU)
ABSTRACT
This study aims to discuss the mastery of accounting before 1970 were rejected
for not providing enough general theory. Informed by theory in economics and finance (and other disciplines such as psychology) and with the aid of a computer,
accounting theory strives to take a new direction by way of collection and analysis of large data which aims to emphasize the empirical approach which seems more systematically to develop a theory .
Keywords
Accounting, neo-empiricism, capital market research, behavioral finance, efficient market hypothesis, positive accounting theory
1. INTRODUCTION
Around 1970 there was a dramatic change in accounting research
approaches. Some reasons have been suggested for this change in direction for reviewing methodological development in accounting thought many people, the
To support researchers in developing accounting theory always find a way futile. Many of the entries relating denagan accounting theory as the arguments,
but mainly the assumption that the principle can not be agreed upon by experts in accounting. Although the description is very inaccurate both approaches are
labeled normative (prescriptive theory dominated before 1970) and positive (descriptive research that has dominated mainstream accounting research since 1970).
In this study want to discuss an emphasis on the description, the most decisive characteristic of mainstream research towards empiricism. Henderson,
Peirson dan Brown (1992) refers that this study is a neo-empirical research: the most appropriate nomenclature. As mentioned, the dominating characteristic is empiricism. This is a "neo" (new) because, although previous studies have relied
on empiricism as he tried to build a "theory" of best practices, after 1970 the emphasis is on a more systematic use of empirical evidence. This is largely made
possible by the availability of large financial databases whose advanced statistical techniques are applied for hypothesis testing. This, in turn, is greatly facilitated by the increasing availability and use of computers.
All neo-empirical accounting research has a fundamental assumption that efficiency market - efficient market hypothesis (EMH). This is referred to as
"hypothetical" because even though more than forty years of research designed to test the hypothesis of all the efforts to date have failed Therefore, consistent with
In this study also discusses some of the findings yan theories related to accounting theory and accounting research, some of the findings of other anta
adala
1. EMH appeared in the 1960s from the work of researchers at the
University of Chicago who were trained in economics and finance known as portfolio theory and used the capital asset pricing model (CAPM). This theory is also used by accountants also worked and studied at the University of Chicago
and, as stated, has been the cornerstone of a large amount of research over the past forty years.
EMH is the assumption that relate to information security prices. The area of research is usually referred to as capital market research but EMH has implications for other regional studies as well. Two Australians working at the
University of Chicago, Ray Ball and Phillip Brown, were there considered to be the first people involved in capital market research in accounting and their work
(Ball and Brown, 1968) already have a large number of citations. Other seminal work is that by Bill Beaver (1968). In this study also discusses the literature references made three types of EMH, strong shape (market very efficient),
semi-strong and weak (the market is not very efficient). A very efficient market would be one in which security prices fully reflect all available information - and to do it
soon became available information - all new information is immediately absorbed by the market. Prominent figure in Indonesia EMH's development in finance,
information will include all the information using the investor to make investment decisions and accounting will only be part of the information.
RESEARCH AND ACCOUNTING CAPITAL
Before the 1960s, the emphasis in finance was fundamental analysis, trying to determine the valuation (intrinsic value) of securities based on past and present financial information (especially financial statements) and industry and
other macroeconomic data. The purpose of this analysis is to uncover bad securities (to use mispricing), ie trade between them securities in the know that
the price is not "right". Employing a new theory in economics and financial, Ball and Brown's study is an attempt to determine the content of the information (for securities market) of accounting numbers (in this case revenue measurement).
Through empirical Examination of the stock market price of Ball and Brown (and later many others) is sure to determine the effect on the stock price of accounting
information (new). Stock price taken as
objective, external indicator of the usefulness of accounting information in the report. Underlying the development of financial and financial economics, and then
accounting, is the notion of portfolio selection; Investments to be made and put into a "Investment Portfolio"? In 1959 Harry Markowitz published a book entitled
Portfolio Selection: Efficient Diversification of Investments (Wiley & Sons).
Starting from this job, in the middle In the 1960s two financial economists,
Most of the capital market research in accounting has been in the form of
event studies, first used in finance. An event study investigates the relationship between information announcement and stock price behavior. As Kothari says:
In an event study, one concludes whether an event, such as an earnings announcement, conveys new information to market participants as reflected in changes in the level of variability in the price of security as reflected in changes in
the variability of the security price or trading volume in a short time around the event (2002, I -116) There are also associate studies which, according to Kothari
. . . test for a positive correlation between the size of the accounting performance (eg, cash flow from operating income) and stock returns. . . (2002, I-116)
Most of the research has been carried out a study, but the study of Ball and
Brown (1968) both, menytakan that there is a body of information in the accounting earnings announcements and correlated signs of abnormal stock
returns in the period earnings announcement. As the name implies, a methodological capital market research related to the examination of the significance and the relationship of various variables when trying to determine the
relationship between information security and information returns to report uangan.
EMH useful to researchers who are interested in the capital markets to examine the effect of new information release. For example, Ball and Brown's
further research questions this conclusion as they find it abnormal return continues after earnings announcements that indicate that new information is not
fully incorporated into the security price.
NOISY TRADE
In efficient market price movements such as random walk. That is, investors can not predict what new information that might result in changes in the
security price will respond unexpected time - at random. However, on a highly efficient market investors will absorb anything new real-time market information
and will respond accordingly. The actual price of a security will be an estimate of intrinsic value. Logically, it's not really worth trading because nobody can "beat the market". However, trade does happen. Efficient market believers responded
with a strong weakening market assumptions for the one in which he can claim that semi-strong market.
In energy market research, Neimark has been suggested that the development of accounting research mirrors developments in Indonesia academy wider but "lagging behind other sectors" (1990, p 103). He has no confidence in
the capital market but the presumption seems to correspond to the capital market research. Researcher in finance and financial economists have generally been
accepted that the market is inefficient but many accounting researchers sticking with it: to them, such as Lee (cited above) has suggested it was a "hunch". An
BEHAVIORAL FINANCE
Other financial economist working at the University of Chicago in the
same department with Fama is Richard Thaler. He has long disagreed with his colleagues about market efficiency. He has argued that markets are inefficient and
investors respond unexpectedly and are called irrational. Such a view led to new ways of researching financial and it is called behavioral finance where the emphasis on the study of the behavior of investors. Non-Investors Rational
behavior has the potential to create problems for the market. Thaler and others for some time noted anomalies in the market as opposed to market efficiency. For
example, they noted that even though the EMH states that investors will only respond to new information trading continues without any new information and prices fluctuate regardless of any new information. Just because the market is
unpredictable (compare random roads) does not mean the market is efficient. The shift from the belief in market efficiency against behavioral finance have
implications for how the market is set and the issue of corporate governance, which in turn will have an impact on the effect.
POSITIVE ACCOUNTING THEORY
At the beginning of this paper indicated that a distinction is made
between the so-called as a theoretical normative and positive. This is a distinction that has been made by economists to describe a theory based on the description
expression of neo-classical economic theory. At PAT personal interests (opportunistic behavior) is the reason for choice of accounting methods and
techniques and policies decision.
PAT stated that the company will try to minimize the cost of the contract and this
will affect the policies pursued, including accounting policies. There is a difference between positivist theories and positive but positivist positive theorists clearly. Therefore, PAT holds most of the teachings of positivism. Thus, the goal
theorising is the examination, description, explanation and control (prediction). There are three hypotheses PAT predictions about who is regulated, that is, the
bonus plan hypothesis, the hypothesis and hypothetical debt agreement ik polit costs.
THEORY IS USED
The theory used in this research is the theory of agency (Agency Theory),
which the agency theory is an important part of the PAT. This theory has its origins in the information economy literature where information is placed into setting an explicit decision ngambilan pe y ang bigger, information leads to better
decisions. agency theory believe there should be an incentive for managers to make additional (voluntary) disclosures.
An agency relationship exists in which one party (principal) delegates some decision-making authority to another party (agent). The principal and the agent
RESEARCH METHODOLOGY
This study is a qualitative research, which this journal describes the major changes in the approach to research in accounting that took place around 1970
until 2004. Where the journal is about the differences in assumptions drawn from the research methods that have been studied journal bebearap . This journal would like to see about the development of the theory of efficient markets operate
ririskiky a (EMH) and a new theory of CAPM.
RESULTS
The results obtained in this journal are:
1. Peda this research there are disclosures on PAT debt agreement,
which considers bahwakedekatan a company with another company will strengthen the violation of the loan agreement will be based accounting and
the greater the possibility of the owners to change the income statement in the period last operusahaan into corporate earnings in the current period 2. There is a test of bonus plans indicating that corporate managers
will be more inclined to choose corporate earnings reporting from the upcoming period against the current period, which is used to avoid the risk
of high losses
3. In this paper the results obtained greater political costs confronted
WEAKNESSES RESEARCH
There are many issues unanswered many related philosophical problems related denagn neo-empirical, especially PAT, research. While this issue is widely
studied but still many researchers who are committed to to engage in the appropriate accounting research. Kuhn suggests that this study will prepare the way of thinking (using the paradigm of the word) in the end will address the issue
of faith.
Watts (1995, p 299) has described one of the reasons for pe rgeseran
toward neo-positive empirical studies that discuss accounting in the late 1960s and early 1970s. It is a fact that US business schools are driven by industry groups and companies to engage in research more "business oriented". . In the
neo-empirical study, researchers using the method of physical science, this method uses deductive hypothesis that the results are descriptive hypotheses derived from
the theory obtained and predict the outcome of which has not been observed so that the results to be obtained does not correspond to the actual research results.
CONCLUSION
This paper illustrates the major changes in research approaches in
accounting that take place circa 1970. While still modernists in the claim as scientific it differs from previous research in several assumptions and research
to respond intellectually. There is sufficient evidence to deny one of the most basic assumptions, that the market operates efficiently (EMH). There is also
evidence of denying many other assumptions used in this new study (eg CAPM).
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