Accounting Theory: Demand and Supply of Accounting Theories Report

This report delves into the demand and supply dynamics of accounting theories, examining the contributions of influential figures like Watts and Zimmerman. It explores how government regulations and political lobbying influence the development and application of these theories. The report highlights the role of accounting theories as tools for justifying actions, particularly within the context of political and economic interests. It also discusses the impact of regulations, such as the Corporations Act, on the demand for accounting theories and the resulting information and scholastic needs. The analysis covers the incentives of various stakeholders, including politicians and private citizens, in utilizing accounting theories to achieve their goals. The report references key literature, including the work of Tagesson (2014) and Watts and Zimmerman (1979), to support its arguments and provide a comprehensive understanding of the subject.

Running Head: ACCOUNTING THEORY
ACCOUNTING THEORY
Name of the Student
Name of the University
Author Note

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Table of Contents
Demand & Supply of the Theories of Accounting.....................................................................2
Reference....................................................................................................................................4

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Demand & Supply of the Theories of Accounting
Jerold L Zimmerman and Ross L Watts are the two most controversial and influential
contributors of accounting literature of the past decades on the basis of corporative and
individual contributions. Further, they have devoted towards creating “positive accounting
theory” and explained the theories of accounting as supplying the excuses in the 1979 paper
that have provided chances for reflecting on vital growth in accounting research. The analysis
of theories of accounting are done as the economic goods and produced in the reaction
towards demand for the theories. Further, regulation of government creates the motivations
for the individuals engaged in lobbying on the proposed procedures of accounting and
theories of accounting are significant reasons in the political lobbying. The intervention of
government helps in producing demand for the various theories. It is due to groups that are
affected by change in the demands of the accounting theory. The positions diversity prevents
the general agreements on accounting theory and theories of the accounting are normative
due to the fact that they are used as the excuses for actions of the politics (Watts and Jerold
1979).
Politicians, bureaucrats and private citizens are having incentives for employing
powers of state for making themselves better. The coalitions of the individuals can be made
better by the help of legislation that redistributes wealth. Welfare, tariffs and commissions of
regulatory are the instances of the special interest legislation that transfer wealth. Moreover,
rules and regulations that results from the government regulations of the business, increases
information and scholastic demands for the theories of accounting. Regulation is the specific
set of the commands, for instance “Corporation Act” includes the direction of appointing
company’s directors. It can be the deliberate state of influence that would be encompassing
first thought and it extends well beyond of it. The instance of this is whole body of the

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“Corporation Law” that helps in directing management, establishment and winding up of the
companies (Tagesson 2014).

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Reference
Tagesson, T., 2014. Accounting reforms, standard setting and compliance. In Public sector
accounting (pp. 8-22). Routledge.
Watts, Ross L., and Jerold L. Zimmerman (1979). "The demand for and supply of accounting
theories: The market for excuses." Accounting Review: 273-305.