What is the significance of empirical accounting theory and normative accounting theory

1. Methodological Differences. Comparing methodological differences from a philosophical point of view, empirical accounting research has some methodological differences with normative accounting. Normative accounting believes that subjective goals are linked to human behavior. The empirical theory in philosophy is the basis of the methodology of empirical accounting theory. Normative accounting theory pays more attention to the logical thinking of laws and theories and focuses on value judgment. Empirical accounting theory advocates pragmatism and the creation of theory from experience. From a dialectical point of view the two theories emphasize different content.

2. Differences in research content. Normative accounting theory summarizes accounting practice, thus arriving at the basic concepts of accounting, and then deduce and analyze these concepts, and finally arrive at accounting standards. These standards are adopted by enterprises to form a set of accounting policies to guide accounting practice. Empirical accounting theory has gone through two stages of development. The first stage was through the use of the theory of corporate finance to examine the behavior of accounting and the capital market and to discuss what role accounting information plays in the capital market. The second stage of research focuses on guiding accounting practice, which is the empirical study of accounting matters. Analyzed from the content of the research, the normative accounting theory research is more complete and has a strong internal logic. The content of empirical accounting theory research is cases, so it is more convincing.

3. There are some differences between the two from the nature of accounting. Normative accounting theory through the normative requirements of accounting standards, from a logical point of view to point out what the optimal accounting practice should be, so as to achieve the standardization of accounting in kind. Its research path is inference based on premises. The research methods are inductive and deductive. Empirical research discusses what accounting is. The research path is inference based on assumptions. The main research method is the empirical one. That is to say, mainly based on the results of observation and experimentation, without personal subjectivity to analyze and study a research method.

4. Compare the research role of the two. The research role of standardized accounting is reflected in three aspects. The first aspect of the theoretical propositions can be further justified. This can make the theory more logical by testing it in advance before testing it in practice. The second aspect of standardized accounting can explain the existing accounting theory and accounting behavior with theory. The third aspect of standardized accounting is that it can test existing accounting theories to find errors and internal contradictions. The role of empirical accounting research is also reflected in three aspects. Firstly, empirical accounting mainly tests whether the premise of standardized accounting is realistic and valid. After testing, it agrees or disagrees with the research results of standardized accounting. Secondly, it is the use of empirical theory to explain accounting practice, mainly analyzing all the current accounting practice procedures as well as the reasons for differences in the physical methods of accounting. Explanations are given for unobserved accounting phenomena or accounting phenomena that are observed but not subjected to data collection and analysis. Empirical accounting is the study of reality and tells what can be done, not what should be done. Finally empirical accounting introduces a large number of theories to broaden the scope of accounting theory.

II. Comparison of Advantages and Disadvantages

1. Advantages and Disadvantages of Normative Accounting. One of the advantages of standardized accounting is the maturity of research methods. Inductive and deductive methods as the research method of standardized accounting has a long history of development, has been a more perfect research method. Deductive method is a very logical research method. Normative accounting research can logically verify theoretical propositions before actually verifying the theory. It can also test existing theories, which helps to detect errors as well as internal contradictions in theories at an early stage. This is important for theoretical argumentation.

The second advantage of standardized accounting is that it can develop accounting practice and accounting theory well. Standardized accounting is for the quality and standardization of accounting practice and to exceed the existing accounting practice and accounting theory as much as possible. So as to provide high quality accounting information for global economic integration.

But normative accounting also has some systematic flaws. The first is a methodological flaw. It mainly neglects the testing of assumptions and premises. So many assumptions are not tested and cannot be called theories. Theories derived on the basis of such assumptions are also often unrealistic and lack practical relevance. If these assumptions are themselves wrong, then the theory derived on this assumption is also wrong. Second is the lack of research methodology; both inductive and deductive approaches focus on qualitative analysis and not on quantitative analysis. A single quantitative analysis cannot show the difference and connection between matters. Qualitative analysis is even more unscientific if there are many research variables. Normative accounting neglects to study the behavior of accounting subjects and does not count the economic consequences of accounting information. It is not enough just to treat groups with different interests as a whole. In the end, the results derived from normative accounting have a strong personal viewpoint and are not empirically verified, but rather have a closed-door feel.

2. Advantages and disadvantages of empirical accounting. First of all the research method of empirical accounting is more scientific. This is mainly because of the combination of qualitative and quantitative research methods. When analyzing data, it is mainly logical to use qualitative methods. When verifying the hypothesis, the main quantitative method, making the conclusion more accurate and scientific. Secondly, empirical accounting research combines accounting practice with practical significance. Empirical accounting research not only explains the existing accounting practice, but also explains those unobserved and accounting phenomena that have occurred but have not been analyzed by data. Finally s empirical accounting research focuses on the study of accounting subject behavior and the motivation of subject behavior. And it introduces many economic research results, thus expanding the scope of accounting theory research. Empirical accounting views the enterprise as a combination of various contractual relationships. And a large number of analyzed the attitude of various interest groups to protect their own interests in the face of accounting standards. Drew a lot of standardized accounting research can not come to a conclusion.

But empirical accounting also has many limitations. The first is that the phenomena and facts used in empirical research are very limited, and there is a certain probability in proving the general thesis. Empirical accounting attaches importance to quantification and modeling, ignoring some secondary factors, resulting in a less systematic study. In addition empirical accounting should not completely exclude value judgment, which is very unreasonable. Because accounting researchers are brokers cannot completely avoid the interference of personal preferences. Finally, empirical accounting has a time lag than standardized accounting. Empirical accounting always builds mathematical models only when there is enough sample data, which is often a number of years after the announcement of accounting standards, there is a serious lag.

Third, conclusion

In summary, the researcher believes that standardized accounting and empirical accounting should complement each other and penetrate into each other in order to develop accounting theory more scientifically and effectively. The findings of normative research must rely on empirical research to be verified. The findings of normative research can provide the basis and premise for empirical research. It is unwise to set aside one side and study it separately. Therefore, the proponents of the two should not be in confrontation and recognize each other's value. Combining the two is the general trend in the development of accounting theory.