(PDF) Accounting Research: A Practical Guide
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Added on 2020-05-11
(PDF) Accounting Research: A Practical Guide
Added on 2020-05-11
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Accounting Practice 1Research in accounting practiceBy Student NameCourse TitleProfessorName of the InstitutionCity and StateDate
Accounting Practice 2Research in accounting practiceIntroductionThis study focus on the issues affecting accounting practices in the contemporary business world.Some of the issues being addressed are the applicability and validity of the agency theory, the concept of stewardship as well as the executive compensation. The main focus is the impact of the listed factors on the relationship of different stakeholders as well as the performance of corporates. The paper is divided into three parts which each part addressing each factor listed above. Question 1: Articles Analysis (Mitra et al. (2017) and Kuruppu et al. (2015))a)Table 3: Sri Lanka researchBesides disclosing their financial statements and reports in their online websites, the listed Sri-Lankan Companies also disclose the information of their background and the products and services they offer (Kuruppu, et al., 2015, p. 75). The information can be extracted from the Table 3, panel A and B. The companies are much interested in increasing their market share, customer base, and sales volume. The information on the products and services offered by the companies are taking the lead on the general disclosure of information followed by background details. The information explicit that companies are also interested in attracting more investors hence the disclosure of their success story. Lastly, Panel B shows the disclosure of corporate information on the online website is influenced by the level of competitiveness in the industry a company is operating.
Accounting Practice 3b)Population and SamplingThe article by Mitra et al. (2017) used a sample of 268 Bangladesh companies while an article byKuruppu et al. (2015) on the disclosure of financial information on the online website used the entire population of 244 listed companies. The use of sample and population in the research havetheir respective advantages and disadvantages. Using the entire population in a research enhance the reliability, accuracy, and credibility of the findings. Likewise, the technique ensures that the vital data is not omitted hence minimizing biases (Mitra, et al., 2017, pp. 25-30). However, application of the entire population is costly and time-consuming when collecting data. In the other hand, sampling saves time, avoid work monotony, allow collection of accurate data in lesser time, and ensure gathering detailed information. However, sampling is based on researcher’s judgment. Important data might be omitted hence reducing the accuracy level. Lastly, when improper sampling technique is selected, the whole research process is jeopardized.c)The more appropriate approachIn studying the disclosure of financial information on the corporate online website, reliability, accuracy, and credibility are fundamental. The researcher should collect detailed data within the limited research budget, time and the schedule. The information collected should be inclusive to minimize the omission of crucial data/ information. Based on these factors, the sampling method should be used over the entire population. It increases reliability, credibility, and accuracy of findings within the research schedule, time and cost (Zelenka, 2010, p. 43).
Accounting Practice 4Question 2: Agency theory, stewardship, and executive compensationa)The assumptions of traditional (positive) agency theoryThe agency theory addresses the existing conflicts of interests that arising from different parties who have different conflicts on the same asset. Most conflict arising from shareholders (principal) and the managers (agent) of a company. The theory is applied in solving the agency problems as well as the tolerance risks that are likely to arise on the relationship between the principals and agents (Higson, 2003, p. 67). The theory is based on three assumptions. First, the managers (agents) should always act in the interest of the shareholders (principals). Second, the interest of the principals is always morally acceptable. And third, the theory allows the managersto act unethically as far as their contract is fulfilled. Finally, it should be noted that the assumptions go contrary to the practical business ethics model. Therefore the agency theory holds that the shareholders’ interests should overrule other interests (Higson, 2003, p. 73). b)The influence of agency theory on the structuring of compensation packagesThe agency theory can be used to align the divergent interests between the agents and the principals. That is, with the application of the theory, the compensation plan can be used to align the interests and goals of corporate’s stakeholders through the reduction of the agency costs(Kleiman, 2000, p. 56). Agency theory proposes two compensation plans i.e. the outcome-oriented (profit sharing, commissions, and stock options) and behavioural-oriented (merit-oriented). According to the outcome-oriented compensation, compensation increases (decreases) when the profit goes up (goes down). Therefore, the agents would work hard to increase the profit leading to increased compensation and in return maximization of the shareholders’ wealth. Likewise, behavioural
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