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Why does positive accounting make a company look better?
Besides, this will result in higher returns from investment (ROI). Thus, this makes the financial position statement of those companies look better (stronger) which then allow them to access greater capital than they would had if they have to expensed share option.
How are positivists different from normative accounting theorists?
Positivists attempt to model the connection between financial accounting, firms and markets in a rational economic framework, rather than to take the stance of normative theorists who dismissed current practice and took a prescriptive attitude.
Which is the best description of Positive accounting theory?
Positive Accounting Theory (PAT) that popularized by Watts and Zimmerman is one of positive theory accounting. PAT is concerned with explaining accounting practices. It is designed to explain and predict which firms will not use a particular method. It does not say something as to which method a firm should use.
How does negative accounting affect the share price?
Investors are acting based on the information provided in the financial statement. Unexpected decline in the profit will lead to a negative sentiment; as a consequence, the investors are not convinced in either purchasing or retaining the company’s share (Deegan pg. 262). Instead of increase in the share price, it will drop the share price.
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After the positive worthy came those founded on social aspects of firms and behavioral aspects, simply they all affiliation back to the positive accounting hypothesis in one right smart or another.
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